manufacturer contemplates a change in technology that would reduce fixed costs from $800,000 to $600,000, and reduce depreciation expense from $125,000 to $ 100,000. However, the ratio of variable costs to sales would increase from 68% to 80%. What would be the change in the break - even level of revenues?
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- Assume a company is considering adding a new product. The expected cost and revenue data for this product are as follows: Annual sales 5,000 units Unit selling price $ 60 Unit variable costs: Production $ 33 Selling $ 6 Incremental fixed costs per year: Production $ 34,500 Selling $ 45,000 If the company adds the new product, it expects the contribution margin of other product lines to drop by $15,300 per year. What is the financial advantage (disadvantage) of adding the new product? Multiple Choice $40,800 $10,200 $89,700 $25,500If the company adds the new product expects the contribution margin of other product lines to drop by $18,500 per year. What is the financial advantage (disadvantage) of adding the new product? a) $25,000 b) $86,500 c)$6,500 d) $43,500CPL contemplates a change in technology that would reduce fixed costs from P 800,000 to P 700,000. However, the ratio of variable costs to sales will increase from 68% to 80%. What will happen to breakeven level of revenues? A. Decrease by P 301,470.50 B. Decrease by P 500,000 C. Decrease by P 1,812,500 D. Increase by P 1,000,000 Topic: Cost Volume Profit
- If total fixed cost of company increases from $250,000 to $300,000, variable cost remainsunchanged at $2 per unit, and selling price increases from $10 to $11.50. How the above changes will affect break-even point in units? A)The break-even point in units will decrease. B)None of the other. C)The break-even point in units will increase. D)The break-even point in units will remain same.A company wants to expand by offering a new product. Expected cost and revenue data for this product are: Annual sales 5,000 units Unit selling price ? Unit variable costs: Production $ 30.20 Selling 6. Incremental fixed costs per year: 32:16 Production $35,000 Selling $45,000 If the company adds this new product, sales of its other product lines will be impacted, causing the contribution margin of other product lines to drop by $18,500 per year. What is the lowest price the company could charge for its new product without affecting the company's total profits? Multiple Choice $39.90 $52.20A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000. a. What is the break-even point in sales dollars? $ b. What is the operating income? $ c. If neither the relationship between variable costs and sales nor the amount of fixed costs is expected to change in the next year, how much additional operating income can be earned by increasing sales by $110,000?
- The Opposition Sales Corporation is expecting an increase of fixed costs by 101,250 upon moving their place of business to the downtown area. The company anticipates that the selling price per unit and the variable expenses will not change. At present, the sales volume necessary to breakeven is P750,000 but with the expected increase in fixed costs, the sales volume necessary to breakeven would go up to P975,000. Based on these projections, what were the total fixed costs before the increase of P101,250The B Co. is expecting an increase in fixed costs by P78,750 upon moving their place of business to the downtown area. Likewise it is anticipating that the selling price per unit and the variable expenses will not change. At present, the sales volume necessary to breakeven is P750,000 but the expected increase in fixed costs, the sales volume necessary to breakeven will go up to P975,000. Based on these predictions, what would be the required peso sales to earn P35,000 in the coming year? A.P1,175,000 B.P950,000 C.P425,000 D.P1,075,000Key Corporation is considering the addition of a new product. The expected cost and revenue data for the new product are as follows: Annual sales Selling price per unit. Variable costs per unit: Production Selling Avoidable fixed costs per year: Production Selling Multiple Choice $325,000 Allocated common fixed corporate costs per year If the new product is added, the combined contribution margin of the other, existing products is expected to drop $65,000 per year. Total common fixed corporate costs would be unaffected by the decision of whether to add the new product. If the new product is added next year, the financial advantage (disadvantage) resulting from this decision would be: O $200,000 $145,000 2,500 units $304 $135,000 $125 $49 $ 50,000 $ 75,000 $ 55,000
- If total fixed cost of company increases from $250,000 to $300,000, variable cost remainsunchanged at $2 per unit, and selling price increases from $10 to $11.50. How the above changes will affect break-even point in units?Your Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales in units 3,000 Selling price per unit $309 Variable costs per unit: Production $130 Selling $50 Traceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000 If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the existing product lines is expected to drop $78,000 per year. What is the increase in net income if the new product is added next year? This is a reverse drop the segment. New CM is positive and new FC and lost CM are negative.Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. $50.00 Selling price per unit.. Production Costs: Direct Materials $10.00 Direct Labour $8.00 Variable Manufacturing Overhead Fixed Manufacturing Overhead.. $7.00 $450,000 $300,000 Fixed Selling & Administrative Expenses.. Variable selling expense per unit . $10.00 Required: