Scott Incorporated has been in business for several months.  Because of increased competition in the region for part adapters, the managers at Scott Incorporated is considering cutting sales price from $26 per adapter to $22 per adapter. New sales price - $22 Variable price per adapter - $17 New contribution margin per adapter - $5 If the variable expenses remain at $17 per adapter and the fixed expenses remain at $7,000, how many adapters will the managers need to sell to break even?  Compute the breakeven sales in units.

Mary Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $19,000 in fixed costs to the $128,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($20 to $19) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $12 per pair of shoes. Management is impressed with Mary’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.

McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,030 per set and have a variable cost of $465 per set. The company has spent $165,000 for a marketing study that determined the company will sell 52,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,800 sets of its high-priced clubs. The high-priced clubs sell at $1,530 and have variable costs of $660. The company also will increase sales of its cheap clubs by 12,400 sets. The cheap clubs sell for $465 and have variable costs of $195 per set. The fixed costs each year will be $9,800,000. The company has also spent $1,250,000 on research and development for the new clubs. The plant and equipment required will cost $32,200,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs will also require an increase in net working capital of $2,620,000 that will be returned at the end of the project. The tax rate is 25…

Divine Electronics Ltd. manufactures a line of headphones. Sales are increasing, and management is concerned that the company may not have sufficient capacity to meet the expected demand for the coming  year. The following data are available for planning purposes:   Product Estimated Demand Next Year Selling Price Direct Materials Direct Labour   1 Wire 78,000 $25.00 $7.30 $5.00   2 Wire 75,000 20.00 10.20 3.20   3 Wire 115,000 17.50 2.80 5.00             The following additional information is available: 1. With the strong competition, the company feels that it can't increase its selling prices above those indicated 2. The direct labour rate is $10 per hour; this rate is expected to remain unchanged during the coming year. 3. Fixed manufacturing costs total $640,000 per year.  Variable manufacturing overhead costs are equal to 25% of the direct labour costs. 4. The company's plant has a capacity of 110,000 direct labour-hours per…

Carrolton, Inc. currently sells widgets for $80 per unit.  The variable cost is $30 per unit and total fixed costs equal $240,000 per year.  Sales are currently 20,000 units annually. ​ The company is considering a 20% drop in selling price that it believes will raise units sold by 20%.   Assuming all costs stay the same, what is the impact on income if this change is made?

The Draper Company is considering dropping its Dream bug toy due to continuing losses. Revenue and cost data on the toy for the past year follow:   Sales of 15,000 units  P 150,000   Variable expenses         120,000   Contribution margin         30,000   Fixed expenses               40,000   Net operating loss       (P 10,000)        If the toy were discontinued, then Draper could avoid P8,000 per year in fixed costs. 1. Under the given conditions, the change in annual operating income from discontinuing the production and sale of Doombugs would be: 2. Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent to discontinuing Doombugs or continuing the production and sale of Doombugs? 3. Suppose that if the Doombug toy is dropped, the production and sale of other Draper toys would increase so as to generate a P16,000 increase in the contribution margin received from these…

The Draper Company is considering dropping its Dream bug toy due to continuing losses. Revenue and cost data on the toy for the past year follow:   Sales of 15,000 units  P 150,000   Variable expenses         120,000   Contribution margin         30,000   Fixed expenses               40,000   Net operating loss       (P 10,000)        If the toy were discontinued, then Draper could avoid P8,000 per year in fixed costs.   1. Under the given conditions, the change in annual operating income from discontinuing the production and sale of Doombugs would be: A) P 30,000 decrease B) P 10,000 increase     C) P 22,000 decrease   D) P 18,000 increase             2. Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent to discontinuing Doombugs or continuing the production and sale of Doombugs? A) 20,000                B) 18,000            C)  6,000                  D)  4,000…

Fruit Computer Company makes a fruit themed computer. Variable costs are $200 per unit, and fixed costs are $31,000 per month. Fruit Computer Company sells 500 units per month at a sales price of $320. The company believes that it can increase the price if the computer quality is upgraded. If so, the variable cost will increase to $230 per unit, and the fixed costs will rise by 25%. The CEO wishes to increase the company's operating income by 10%. Which sales price level would give the desired results? (Round your answer to the nearest cent.) O $371.30 per unit O $262.00 per unit O $378.00 per unit. O $1056.00 per unit < Previous

Ore Company produces bookcases. Sales were good in 2019. However, with the slowdown in the economy, the Chief Financial Officer is concerned about the sales for 2020. The income statement for 2020 is as follows: Sales revenue $600,000 Less: Variable costs $360,000 Contribution margin $240,000 Less: Fixed costs $140,000 Net profit $100,000 The company expects to sell 60,000 units in 2020. Compare different types of cost behaviours to do the following: (a) Use cost-volume-profit analysis to determine the breakeven point in units and in dollars. (b) Use cost-volume-profit analysis to determine the margin of safety in units and in dollars. (c) Assuming that cost behaviour pattern remains unchanged, compute the decrease in net income if sales revenue dropped by $200,000 in 2020.

McGilla Golf is evaluating a new golf club. The clubs will sell for $1,060 per set and have a variable cost of $480 per set. The company has spent $172,500 for a marketing study that determined the company will sell 53,500 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,100 sets of its high-priced clubs. The high-priced clubs sell at $1,560 and have variable costs of $690. The company also will increase sales of its cheap clubs by 12,700 sets. The cheap clubs sell for $480 and have variable costs of $210 per set. The fixed costs each year will be $9,950,000. The company has also spent $1,325,000 on research and development for the new clubs. The plant and equipment required will cost $33,250,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs also will also require an increase in net working capital of $2,710,000 that will be returned at the end of the project. The tax rate is 23 percent…