PRESIDENT\'S PROPOSAL. discontinue the s-pump line immediately. S pumps would no

Question

PRESIDENT'S PROPOSAL. discontinue the s-pump line immediately. S pumps would not be returned to the product line unless the problems with the pump can be identified and resolved 2. increase quarterly sales promotion $300,000 on the R-pump product line in order to increase sales volume by 15%. 3. cut production on the F-Pump line by 50 percent, and cut the traceable advertising and promotion for this line to $60,000 each quarter.

"Using the operating data presented for ontario pump company and assume that the president's proposed course of action had been implemented at the beginning of the second quarter. Than evaluate the president's proposal by sepcifically responding...

The answer inc/decr fix cost & segment contribution is below. I am trying to figure out how to calculate the increased (decreased) for the fixed cost to get the answer noted below

Ontario Pump Company Shipping Expenses Income Statement Second Quarter
in thousands Analysis of unit sales prices for pumps Qtrly Advertising and Promotions R-Pump F-Pump S-Pump Total R-Pump $600 $630,000 $30 Sales $4,800 $2,700 $2,700 $10,200 F-Pump $270 $300,000 $12 Cost of goods sold $3,144 $2,310 $2,850 $8,304 S-Pump $540 $120,000 $30 Gross margin $1,656 $390 ($150) $1,896 Selling and Admin. Expenses $1,110 $555 $405 $2,070 Income before taxes $546 ($165) ($555) ($174) Unit manufacturing costs R-Pump F-Pump S-Pump Direct material $93 $51 $150 Direct labor 120 60 180 variable manufaturing overhead $135 $90 $180 fixed manufacturing overhead $45 $30 $60 total $393 $231 $570

Explanation / Answer

              1,20,000

Note : In the problem It was wrongly misquoted the numbers between R - Pump and F - Pump

( in thousands) R - Pump Sales                     4,800 Per Unit Price                        600 No of units sold                     8,000 15% increase in sales                     1,200 contribution margin per unit                        222 Total Contribution increse in contribution               2,66,400 Increase in Fixed Costs additional Marketing expenses             -3,00,000 Additional loss due to this decission                 -33,600 ( in thousands) F - Pump Sales                     2,700 Per Unit Price                        270 No of units sold                  10,000 50% cut in production                   -5,000 contribution margin per unit                           57 Total Contribution derese in contribution)             -2,85,000 Decrease in Fixed Costs reduction in Marketing expenses (60000*4)               2,40,000 Additional loss due to this decission                 -45,000 ( in thousands) S - Pump Sales                     2,700 Per Unit Price                        540 No of units sold                     5,000 100% cut in production                   -5,000 contribution margin per unit                            -   Total Contribution derese in contribution)                            -   Savings in Fixed Costs due to supension of operations               1,20,000 Savings in Fixed Costs due to this decission

              1,20,000

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