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Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) HINT:Use the hi-low method from chapter 6. Cost of goods sold Shipping Salaries & commission 2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 86,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) Break-even sales Annual profit (86,500 units) per unit per unit per unit units 3. Calculate the change in profit if the selling price were reduced by $13.00 each and annual sales were to increase by 8,400 units. 4. Determine the change in profit if the company were to increase advertising by $117,000 and if this were to increase sales by 8,400 units.

Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) HINT:Use the hi-low method from chapter 6. Cost of goods sold Shipping Salaries & commission 2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 86,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) Break-even sales Annual profit (86,500 units) per unit per unit per unit units 3. Calculate the change in profit if the selling price were reduced by $13.00 each and annual sales were to increase by 8,400 units. 4. Determine the change in profit if the company were to increase advertising by $117,000 and if this were to increase sales by 8,400 units.

FINANCIAL ACCOUNTING
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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Nn. 119.

The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense Total operating expenses Net income Cost of goods sold Shipping Salaries & commission Central Valley Company Comparative Income Statement March 6,700 6,200 $783,900 $ 725,400 416,050 391,716 $367,850 $ 333,684 Break-even sales Annual profit (86,500 units) |||| April May 7,800 $ 912,600 474,552 $ 438,048 $ 64,900 $ 52,600 62,500 95,500 95,500 95,500 165,900 134,500 165,000 17,500 17,500 50,500 17,500 50,500 50,500 $ 394,300 $ 350,600 $ 401,900 $ 391,000 $ (26,450) $ (16,916) $ 36,148 $ 147,902 Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) HINT:Use the hi-low method from chapter 6. + units $ 68,400 95,500 170,000 June 9,400 $1,099,800 560,898 $ 538,902 17,500 50,500 per unit per unit per unit 2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 86,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) 3. Calculate the change in profit if the selling price were reduced by $13.00 each and annual sales were to increase by 8,400 units. 4. Determine the change in profit if the company were to increase advertising by $117,000 and if this were to increase sales by 8,400 units.
Transcribed Image Text:The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense Total operating expenses Net income Cost of goods sold Shipping Salaries & commission Central Valley Company Comparative Income Statement March 6,700 6,200 $783,900 $ 725,400 416,050 391,716 $367,850 $ 333,684 Break-even sales Annual profit (86,500 units) |||| April May 7,800 $ 912,600 474,552 $ 438,048 $ 64,900 $ 52,600 62,500 95,500 95,500 95,500 165,900 134,500 165,000 17,500 17,500 50,500 17,500 50,500 50,500 $ 394,300 $ 350,600 $ 401,900 $ 391,000 $ (26,450) $ (16,916) $ 36,148 $ 147,902 Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) HINT:Use the hi-low method from chapter 6. + units $ 68,400 95,500 170,000 June 9,400 $1,099,800 560,898 $ 538,902 17,500 50,500 per unit per unit per unit 2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 86,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) 3. Calculate the change in profit if the selling price were reduced by $13.00 each and annual sales were to increase by 8,400 units. 4. Determine the change in profit if the company were to increase advertising by $117,000 and if this were to increase sales by 8,400 units.
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