Question

Taylor Company has current sales of 1,000 units, at a selling price of $190 per unit, variable costs per unit of $76 and fixed expenses of $96,000. The company believes sales will increase by 300 units, if the company introduces sales commissions as an incentive for the sales staff. The change will decrease the selling price to $175 per unit, increase variable cost per unit to $100 and decrease fixed expenses by $20,000. What is the net operating income after the changes?

A.Increase of 21500

B Decrease 30000

C. Increase 24500

D. Decrease 22000

Answer #1

Data concerning Bazin Corporation's single product appear
below:
Per Unit
Percent of Sales
Selling price
$
100
100
%
Variable expenses
20
20
%
Contribution margin
$
80
80
%
Fixed expenses are $384,000 per month. The company is currently
selling 6,000 units per month. The marketing manager would like to
introduce sales commissions as an incentive for the sales staff.
The marketing manager has proposed a commission of $9 per unit. In
exchange, the sales staff would accept a...

Data concerning Ulwelling Corporation's single product appear
below:
Per Unit
Percent of
Sales
Selling price
$
200
100%
Variable
expenses
46
23%
Contribution
margin
$
154
77%
Fixed expenses are $1,043,000 per month. The company is
currently selling 9,800 units per month.
The marketing manager would like to introduce sales commissions
as an incentive for the sales staff. The marketing manager has
proposed a commission of $11 per unit. In exchange, the sales staff
would accept an overall decrease in...

Data for Hermann Corporation are shown below:
Per Unit
Percent of Sales
Selling price
$
130
100
%
Variable expenses
78
60
Contribution margin
$
52
40
%
Fixed expenses are $86,000 per month and the company is selling
2,800 units per month.
2-a. Refer to the original data. How much will net operating
income increase (decrease) per month if the company uses
higher-quality components that increase the variable expense by $6
per unit and increase unit sales by 15%

1) Data for Hermann Corporation are shown below:
Per Unit
Percent of Sales
Selling price
$
110
100
%
Variable expenses
77
70
Contribution margin
$
33
30
%
Fixed expenses are $82,000 per month and the company is selling
3,500 units per month.
a. Refer to the original data. How much will net operating
income increase (decrease) per month if the company uses
higher-quality components that increase the variable expense by $5
per unit and increase unit sales by...

Data for Hermann Corporation are shown below:
Per Unit
Percent of Sales
Selling price
$
100
100
%
Variable expenses
61
61
Contribution margin
$
39
39
%
Fixed expenses are $80,000 per month and the company is selling
3,700 units per month.
2-a. Refer to the original data. How much will net operating
income increase (decrease) per month if the company uses
higher-quality components that increase the variable expense by $3
per unit and increase unit sales by 15%....

Data for Chocolate Corporation are shown below:
Per Unit
Percent of Sales
Selling price
$
135
100
%
Variable
expenses
81
60
Contribution
margin
$
54
40
%
Fixed expenses are $87,000 per month and the company is selling
2,900 units per month.
Refer to the original data. How much will net operating income
increase (decrease) per month if the company uses higher-quality
components that increase the variable expense by $5 per unit and
increase unit sales by 20%.
Net...

Unit sales 20,000 units
Selling price per unit $60 per unit
Variable expenses per unit $45 per unit
Fixed expenses $240,000
CVP Relationships Compute the CM ratio
Selling price per unit Variable expenses per unit =
Contribution margin per unit =
CM ratio =
Compute the break-even
Break-even in unit sales=
Break-even in dollar sales=
Compute the margin of safety
Margin of safety in dollars=
Margin of safety percentage=

Data for Hermann Corporation are shown below:
Per Unit
Percent
of Sales
Selling price
$
90
100
%
Variable expenses
63
70
Contribution margin
$
27
30
%
1-a. How much will net operating income increase (decrease) per
month if the monthly advertising budget increases by $5,000, the
monthly sales volume increases by 100 units, and the total monthly
sales increase by $9,000?
1-b. Should the advertising budget be increased?
2-a. Refer to the original data. How much will net...

Data for Hermann Corporation are shown below: Per Unit Percent
of Sales Selling price $ 70 100 % Variable expenses 49 70
Contribution margin $ 21 30 % Fixed expenses are $74,000 per month
and the company is selling 4,400 units per month. Exercise 5-5
(Algo) Part 2 2-a. Refer to the original data. How much will net
operating income increase (decrease) per month if the company uses
higher-quality components that increase the variable expense by $4
per unit and...

Data for Hermann Corporation are shown below:
Per Unit
Percent of Sales
Selling price
$
80
100
%
Variable expenses
44
55
Contribution margin
$
36
45
%
Fixed expenses are $76,000 per month and the company is selling
2,500 units per month.
rev: 06_04_2020_QC_CS-205709, 06_18_2020_QC_CS-216765,
07_14_2020_QC_CS-216765
2-a. Refer to the original data. How much will net operating
income increase (decrease) per month if the company uses
higher-quality components that increase the variable expense by $4
per unit and increase...

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