Unformatted text preview: (a) What is the company's break-even point in "sticks?" Can the company sustain a 30% reduction in total volume, and remain profitable? (b) The company's sole shareholder, Doug Anderson, generally lives off of dividends paid by the business. The business typically declares and pays a dividend equal to 25% of net income. If Doug needs to receive $100,000 in dividends for normal living expenses, what total revenues must Anderson Metals produce in 20X7? (c) If total volume is expected to decrease by 20%, and the company wishes to continue to produce a $1,000,000 net income by raising the per unit selling price, what revised per stick price must be imposed? Will this strategy necessarily work? (d) If the company expects a drop in raw material prices to reduce total variable costs to $2 per stick, but all other revenue and cost factors to be unaffected, what will be the revised break-even point in sales and units?...
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This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.
- Spring '11