- The Lombard Company produces and sells office-space dehumidifiers to companies that own or rent office space. (Can you provide answer to D ONLY.)
(a) Lombard’s materials and labor costs for producing the dehumidifiers are $3,000 per unit and the fixed costs of its dehumidifier production plant are $1.85 million. If Lombard sells a dehumidifier for $5,000 per unit, what is its percent contribution margin? Show your work.
(b) If Lombard used revenue-based compensation to pay its sales force, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a
(c) If Lombard used the profit-based compensation method described in the course to pay its sales force and sets the dehumidifier’s target price at $5,000 per unit, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a price of $4,500? Show your work.
(d) Explain the benefit to Lombard’s management of using the profit-based compensation method of Part (c) over revenue-based compensation for its sales force.
to generate a solution
a solution
- 2) Alcem Pte. Ltd. Is in the business of manufacturing cement. The company sets up a 1 million ton plant. The total cost of setting up the plant is $100 million. The cost of Raw material/ Labor etc for producing 1 ton of cement is $ 40. The price of Cement is $80 per ton. Assume a Capital Cost of 10% (which is also its opportunity cost) a) What is the breakeven quantity of cement for Alcem? 250,000 tons b) In the short run, below what price should Alcem shut down? $40 c) If Alcem produces and sells 1 million tonnes of Cement, what is the Economic Profit it is making? $30 million d) If there are no barriers to entry in this business what would you expectarrow_forwardUse the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (10,900 units at $225 each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs $ 2,452,500 1,962,000 490,500 387,000 Income $ 103,500 Exercise 18-12 (Algo) Target income and margin of safety LO C2 1. Assume Hudson has a target income of $159,000. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target income, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1. Amount of sales 2. Margin of safety %arrow_forwardPlease show me how to work this out. It has four parts but one questionarrow_forward
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