10) The following information has been provided by Arawak Farms Limited for the month of August. Sales ( 10,000 Units ) $ 600,000 $ 420,000 Variable Costs Contribution Margin Fixed Costs $ 180,000 $ 110,000 Net Income $ 70,000 Management is considering the following courses of action to increase Net Income: 1) Increase selling price by 5% with no change in variable costs. 2) Reduce variable costs to 66% of sales. 3) Reduce Fixed Costs by $ 10,000. Required: a) Advise management on the best course of action to maximize the net income. 15 Marks

1. Mower Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling Price $120 100% Variable Expenses $48 40% Contribution Margin $72 60% Fixed expenses are $567,000 per month. The company is currently selling 9,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $11 per unit. In exchange, the sales staff would accept a decrease in their salaries of $84,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 600 units. What should be the overall effect on the company's monthly net operating income of this change? A. Decrease of $146,400 B. Increase of $21,600 C. Increase of $77,400 D. Increase of $669,600

1)  Ehrlich Enterprises prepared the following contribution format income statement based on a sales volume of 3,000 units (the relevant range of production is 1,000 units to 5,000 units): Contribution Margin Income Statement Sales  $  48,000   Variable expenses      30,000   Contribution margin      18,000   Fixed expenses      10,000   Net operating Income  $    8,000         If sales decline to 1,300 units, what would be the net operating income (loss)? If the selling price increases by $3 per unit and the sales volume decreases by 100 units, what would be the net operating income? What is the break-even point in unit sales? What is the break-even point in dollar sales?

19) Alpha has a plant capacity of 200,000 units per month. Unit costs at capacity are: Direct materials $4.00 6.00 3.00 Direct labor Variable overhead Fixed overhead Marketing fixed 1.00 7.00 Marketing/distribution-variable 3.60 Current monthly sales are 190,000 units at $30.00 each. Q, Inc., has contacted Alpha about purchasing 2,000 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is Alpha's change in operating profits if the one-time-only special order is accepted?