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$6.00 ACCOUNTING HELP
- From Mathematics: General-Mathematics
- Closed, but you can still post tutorials
- Due on Dec. 03, 2008
- Asked on Dec 01, 2008 at 8:20:17PM
Q:CVP ANALYSIS-WHAT IF QUESTIONS MIX ISSUE- CAMDEN METAL CO MAKES A SINGLE PRODUCT THAT SELLS FOR $84,00 PER UNIT. VARIABLE COSTS ARE $54,00 PER UNIT, AND FIXED COSTS TOTAL $120,000 PER MONTH.
REQUIRED:
A. CALCULATE THE NUMBER OF UNITS THAT MUST BE SOLD EACH MONTH FOR THE FIRM TO BREAK EVEN.
B. CALCULATE OPERATING INCOME IF 5,000 UNITS AR SOLD IN A MONTH.
C. CALCULATE OPERATING INCOME IF THE SELLING PRICE IS RAISED TO $88 PER UNIT, ADVERTISING EXPENDITURES ARE INCREASED BY $16,000 PER MONTH, AND MONTHLY UNIT SALES VOLUME BECOMES 5,200 UNITS.
D. ASSUME THAT THE FIRM ADDS ANOTHER PRODUCT TO ITS PRODUCT LINE AND THAT THE NEW PRODUCT SELLS FOR $40 PER UNIT, HAS VARIABLE COSTS OF $28 PER UNIT, AND CAUSED FIXED EXPENSES IN TOTAL TO INCREASE TO $150,000 PER MONTH. CALCULATE THE FIRMS OPERATING INCOME IF 5,000 UNITS OF THE ORIGINAL PRODUCT AND 3,000 UNITS OF THE NEW PRODUCT ARE SOLD EACH MONTH. FOR THE ORIGINAL PRODUCT,USE THE SELLING PRICE AND VARIABLE COST DATA GIVEN IN THE PROBLEM STATEMENT.
E. CALCULATE THE FIRMS OPERATING INCOME IF 4,000 UNITS OF THE ORIGINAL PRODUCT AND 4,000 UNITS OF THE NEW PRODUCT ARE SOLD EACH MONTH.
F. EXPLAIN WHY OPERATING INCOME IS DIFFERENT IN PARTS D AND E, EVEN THOUGH SALES TOTALED 8,000 UNITS IN EACH CASE.
