Question

Chruch Corporation manufactures numerous products, one of which is called Tau-42. The company has provided the...

Chruch Corporation manufactures numerous products, one of which is called Tau-42. The company has provided the following data about this product:
Unit sales (a) 70,000
Selling price per unit $ 56.00
Variable cost per unit $ 40.00
Traceable fixed expense $ 640,000
Assume that the total traceable fixed expense does not change. If Chruch decreases the price of Tau-42 to $52.64, what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $56? (Round your "Percentage" answers to 1 decimal place.)
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Percentage change in unit sales would provide the same net operating income as is currently being earned = 26.6 %

Explanation:

Existing total contribution margin = ($56 - $40) * 70,000 units = $1,120,000.

New contribution margin after price change = $52.64 - $40.00 = $12.64.

Total number of unit sales after price change = $1,120,000 / $12.64 = 88,608 units

Increase in unit sales after price change = 88,608 units - 70,000 units = 18,608 units

Percentage change in unit sales would provide the same net operating income as is currently being earned :

( 18,608 units / 70,000 units ) * 100 = 26.6 %.

   

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Woodridge Corporation manufactures numerous products, one of which is called Alpha-32. The company has provided the...
Woodridge Corporation manufactures numerous products, one of which is called Alpha-32. The company has provided the following data about this product: Unit sales (a) 97,000 Selling price per unit $ 75.00 Variable cost per unit $ 60.00 Traceable fixed expense $ 1,304,000 Management is considering increasing the price of Alpha-32 by 6%, from $75.00 to $79.50. The company’s marketing managers estimate that this price hike would decrease unit sales by 5%, from 97,000 units to 92,150 units.Assuming that the total...
11. Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130,...
11. Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 116,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 18 Direct labor 30 25 Variable manufacturing overhead 20 15 Traceable fixed manufacturing...
7. Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130,...
7. Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 116,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 18 Direct labor 30 25 Variable manufacturing overhead 20 15 Traceable fixed manufacturing...
98) Assume that a company manufactures numerous component parts, one of which is called Part A....
98) Assume that a company manufactures numerous component parts, one of which is called Part A. The company’s absorption costing system indicates that it costs $23.00 to make one unit of Part A as shown below: 98) Assume that a company manufactures numerous component parts, one of which is called Part A. The company’s absorption costing system indicates that it costs $23.00 to make one unit of Part A as shown below: Direct materials $ 10.00 Direct labor 6.00 Variable...
Pole Company manufactures two products called Tap and Bounce that sell for $360 and $240, respectively....
Pole Company manufactures two products called Tap and Bounce that sell for $360 and $240, respectively. Each product uses only one type of raw material that costs $18 per pound. The company has the capacity to annually produce 300,000 units of each product. Its unit costs for each product at this level of activity are given below: Tap      Bounce Direct materials. . . . . . . . . . . . . . . . . . ....
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 34 28...
Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively.
Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below:AlphaBetaDirect materials$40$15Direct labor3030Variable manufacturing overhead1816Traceable fixed manufacturing overhead2629Variable selling expenses2319Common fixed expenses2621Total cost per unit$163$130The company considers its traceable fixed manufacturing overhead...
Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively....
Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 38 34 Variable manufacturing overhead 25 23 Traceable fixed manufacturing overhead...
Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively....
Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 34 28 Variable manufacturing overhead 21 19 Traceable fixed manufacturing overhead...
Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively....
Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 37 30 Variable manufacturing overhead 24 22 Traceable fixed manufacturing overhead...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT