Martha Manufacturing produces a single product that sells for $80. Variable costs per unit equal $32. The company expects total
fixed costs to be $72,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. 1) What is the current breakeven point in terms of number of units?
2) Suppose management believes that a $16,000 increase in monthly advertising expense will result in a considerable increase in sale. Sale must increase by how much to justify this additional expenditure?
3) Suppose that management believes that a 10% reduction in the selling price will result in a 10% increase in sales. If this proposed reduction in selling price is implemented,
a) Operating income will decrease by $8,ooo
b) Operating income will increase by $8,000
c) Operating income will decrease by $16,000
d) Operating income will increase by $16,000.
24,000 is the profit they would make for hitting their goal.
Question 1: What is the break-even point? The break-even means they make no money, but they also lose no money. So that final number (24,000) would be 0 instead. How many units would they have to make to hit zero? (x * 80) - (x * 32) - 72,000 = 0. 80x - 32x = 72,000 48x = 72,000 x = 1500 units
We can verify by using our first formula we've already determined, using this new value for units. (1,500* 80) - (1,500 * 32) - 72,000 = ? 120,000 - 48,000 - 72,000 = 0? True!
Question 2: If they increase their expenses by 16,000, what is their new break even point?
In here, we can say that we are looking for the nominal interest rate. Given is the real interest rate which is 5% and the inflation rate of 10%. The nominal rate of interest is real interest rate plus the inflation rate. Savers will now require an interest rate of 15%
Pine Street should sell finished bookcases because they have a higher contribution margin.
Explanation:
We compare the contribution margin of the two categories to find out whether Pine Street should sell unfinished or finished bookcases.
Pine Street Inc.
Unfinished bookcases
Contribution Margin
Sales Price $58.10
Less Production costs
Variable Costs $37.49
<u>Fixed Costs $10.50 (47.99)</u>
<u>Contribution Margin $ 10.11</u>
Pine Street should sell finished bookcases because they have a higher contribution margin. It is almost double of the unfinished book cases contribution margin.
The company's objectives, purchasing<span> policies and resources </span>can influence<span> the buying process. ... Four main </span>influences<span> impact the </span>business buying decision<span> process: ... from marketing or other functional</span>departments, must pay close attention to ... Individual factors including age, education level, personality,job<span> tenure, and ...</span>
Based on the information provided within the question it can be said that this attempt seemed to be aimed at reducing dissonance. This term refers to holds two or more contradictory beliefs, ideas, or values. Which in this scenario, the salesman makes this comment in order to see if Billy was satisfied and knew that his purchase was a good one. If Billy were to decide to sell the car to one of those interested buyers then it is likely because he does not know its value.