4) Belton Company currently sels?ts products for S25 per unit Management is cont

Question

4) Belton Company currently sels?ts products for S25 per unit Management is contemplating a 20% in ,ease in the sale price for the next year Var able costs arecurrenty 30% ofsales revenue and are not expected to dmp next year. Fixed expenses ate $150,000 pet year Iffixed costs increase 10%net year, and the new sale price per to be sold to breakeven? (5 points) unit goes into effect, how many units will need 5) Fairfield Company management has budgeted the fellowving amounts for its nest Bscal year otal fixed expenses unit Variable ex f Fairfield Company spends an additional $30,000 on advertising sales volume should increase by 2,500 units What effect will this have on operating income? and by how mach? Spoints) 6) Mounta nt pgolf course is planning for the coening seis nln estors would like to earn a 12% monte a company primarily incurs fixed costs to groom the greens and fainways company's $50 million of assets The Fixed costs are projected to be $25,000,000 for the golfing season. About 400,000 golfers are expected each year variable costs are ab ut S8 perg lier. The Mountaintop golfen me has a favorable rep tab in hom therefore, has some control over the price of a Mountaintop charge for a round of golt? 5 points) 7) Jim Bean Company has three product lines: D, F, and F. The following information is available Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (Gloss) 80,000 $42,000 $20.000 $ 8.000 s(9,000) s 40,000 $21,000 s 28,000 56,000 Jim Bean Company is thinking of discontinaing product line F because it is reporting an operating los All fived costs are unavoidable. Assuming Jim Bean Company discontinues line Fand is able to double the production and sales of product line E without increasing fixed costs. What affect will this have on operating income? 8) The Nut House sells almonds, cashews, and pistachios. They sold 10,000 cans last year Pistachios outsold cashews by a margin of 2 to 1 in cans. Sales of almonds were half the sales of cashews in cans Fixed costs fo the Nut House are $20,000 and additional information follows Unit V Unit Sales Product Almonds 541 $100 56.0 Pistachios 54. What is the breakeven sales volume and dollars for each nut (rounded)? (10 points)

Explanation / Answer

Q4. Selling price per unit 25 Variable cost per unit (25*30%) 7.5 Revised Selling price (25+20%) 30 Revised Contribution per unit (30-7.50) 22.5 Revised Fixed expense=150,000+10% = 165,000 Break eveen in units: Fixed Cost / Contribution margin per unit 165000 / 22.50 = 7334 units Q5. Salees price 40 variable cost 25 Contribution margin per unit (40-25) 15 CM ratio (15/40*100) 37.50% Incremental income: Incremental revenue (2500 units @ 40) 100000 CM ratio 37.50% Incremental contribution 37500 Less: Additional advertisement 30000 Increase in income 7500

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