Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from thecompany's budget for the upcoming year appear below:SalesVariable expensesFixed manufacturing expensesFixed selling and administrative expenses$ 730,000$ 350,000$ 234,000$ 161,000In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturingexpenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company ofeliminating this product for the upcoming year would be:Multiple Choiceо$15,000О($15,000)($143,000)О$143,000< Prev4 of 16Next >

The correct answer is (3) $300,000.Explanation:The correct answer is (3) $300,000.To calculate the…

Answered: Product U23N has been considered a drag…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Due to erratic sales of its sole product – a high-capacity battery for laptop computers – PEM Ltd has been experiencing difficulty for some time. The company’s statement of profit or loss for the most recent month is given below: Sales (25,000 units × £30) £750,000 Less variable expenses 525,000 Contribution margin 225,000 Less fixed expenses 239,400 Net loss 14,400 Required: 1. Compute the company's CM ratio. Compute the company's break-even point in units. Compute the company's break-even point in pounds. (Do not round intermediate calculations.) 2. The president believes that a £60,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an £300,000 increase in monthly sales. If the president is right, what will be the effect on the company’s monthly profit or loss? (Use the incremental approach in preparing your…
Memofax Inc. produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below. Sales (12,600 units at $40 per unit $504,000 Variable expenses Contribution margin Fixed expenses 302,400 201,600 Net operating loss 225,600 $(24,000) The sales manager feels that a $7,700 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $73,000 increase in monthly sales. If the sales manager is right, what will the revised net operating income or loss?
Due to erratic sales of its sole product—a high-capacity battery for laptop computers—TECH, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:Sales (12,700 units × $30 per unit) $ 381,000Variable expenses 190,500Contribution margin 190,500Fixed expenses 213,000Net operating loss $ (22,500 )Required:1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.2. The president believes that a $6,100 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $85,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $36,000 in the monthly advertising budget, will double unit…
Ramli Burgers Bhd sold 20,000 units of its only product and incurred a RM50,000 loss (ignoring taxes) for the current year as shown in contribution margin income statement below. During the budget setting meeting for next year’s 2016 activities, the production manager notes that variable costs can be reduced by 50% by installing a machine that automates several operations. To obtain these savings the company must increase its annual fixed cost by RM150,000. The maximum output capacity of the company is 40,000 units per year. Ramli Burgers Contribution margin income statement for the year ended 31 December 2015 RM Sales 750,000 Variable costs 600,000 Contribution margin 150,000 Fixed costs 200,000 Net loss (50,000) Required a) Compute the break-even point in ringgit sales for 2015. b) Compute the predicted break-even point in ringgit sales for the year 2016 assuming the machine is installed and there is no change in unit sales price. c) Prepare a forecasted contribution margin…
Assume that as a result of reorganizing the production process, the management of Benoit Manufacturing was able to reduce direct material cost per unit by $5 due to a change in the supplier of the raw material used in the production process. Variable manufacturing overhead per unit would also decrease by $3. The business is also considering paying additional annual commission of $36,400 to its sales team as part of the sales expansion effort, which should result in an increase in sales revenue. The head of the marketing department has indicated that the effort of the sales team should result in a 5% increase in sales volume. What must the new selling price per unit be if the company wishes to meet the shareholders desired profit level for 2020? Is this a viable option?
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A.4
PEM, Incorporated, is experiencing financial difficulty due to erratic sales of its only product, a high-capacity battery for laptop computers. The company’s contribution format income statement for the most recent month is given below: Sales (13,000 units × $20 per unit) $ 260,000 Variable expenses 156,000 Contribution margin 104,000 Fixed expenses 116,000 Net operating loss $ (12,000) The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?
The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $179,000 of the fixed manufacturing expenses and $155,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would $ 745,000 $ 387,000 $ 253,400 $216,200 decline increase by if product B90D were dropped. Therefore, the product dropped
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