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assign 5-1

# assign 5-1 - sales(8,000 81 648000 Variable Exp(8,000*63...

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Assign – 5-1 Q 6-7 a. If selling price per unit decreases, total revenue would decrease and that means profit also decreases b. If fixed cost increases, loss area increases and profit decreases c. If the variable cost per unit is increased, profit area will decrease E 6-14 Part 1. Unit price = \$90.00 Variable exp = \$63 Fixed exp = \$135,000 Breakeven point would be: 90Q = 63Q + 135,000 + 0 Q = \$5,000 = Part 2. If the variable exp increases, there will be a higher break even point because the expense increased, we have to sell more products to make up for that expense. For example, if Variable exp increased to \$80, the breakeven point for the above formula would be: 90Q = 80Q + 135,000 + 0 Q = \$13,500 Part 3. With current situation : sales (8000*90) 720000 Variable Exp (8000*63) 504000 contribution exp 216000 Fixed exp 135,000 Net operating income 81,000 If only the unit price is decreased by 10%, then unit price would be \$81, then:

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Unformatted text preview: sales (8,000 * 81) 648000 Variable Exp (8,000*63) 504000 contribution exp 144000 Fixed exp 135,000 Net operating income 9,000 If we assume that sales there is a 25% increase in sales, then sales (10,000 * 81) 810000 Variable Exp (10,000*63) 630000 contribution exp 180000 Fixed exp 135,000 Net operating income 45,000 Part 4. Sales – variable exp – fixed exp = net income 81X– 63X -135,000 = 72000 X = 11,500, where X is # of lantern to be sold. E 6-15 I do not understand this problem properly. I contacted the SLC and I still didn’t understand it. With the given info, how do I calculate the variable exp. CM ratio = 598,000/1,000,000 = .59 I am confused! Please help sales 1,000,000 Variable Exp 504000 contribution exp Fixed exp 598,500 Net operating income...
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assign 5-1 - sales(8,000 81 648000 Variable Exp(8,000*63...

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