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Alex777 [14]
3 years ago
12

Seating Company is currently selling 1,400 oversized bean bag chairs a month at a price of ​$95 per chair. The variable cost of

each chair sold includes ​$65 to purchase the bean bag chairs from suppliers and a ​$2 sales commission. Fixed costs are $ 13,000 per month. The company is considering making several operational changes and wants to know how the change will impact its operating income: Prepare the​ company's current contribution margin income statement. ​(Use parentheses or a minus sign for an operating​ loss.)
Business
1 answer:
-BARSIC- [3]3 years ago
7 0

Answer:

Contribution Margin Income Statement

+Sales Revenue                        1,400 x $95 = $133,000

-Variable production costs     1,400 x $65 = ($91,000)

-Variable selling costs              1,400 x $2 = ($2,800)

=Contribution Margin                $133,000 - $91,000 - $2,800

                                                 =  $39,200

-Fixed production costs          ($13,000)

=Net profit                                = $39,200 - $13,000

                                                 = $26,200

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3 years ago
Calculating the price elasticity of demand - A step-by-step guide
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Answer:

1.33

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New price = $2,550

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= (470,000 + 363,000) ÷ 2

= 833,000 ÷ 2

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= (Original price + New price) ÷ 2

= ($2,100 + $2,550) ÷ 2

= $4,650 ÷ 2

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Step 3:

change in quantity = new quantity - original quantity

                               = 363,000 - 470,000

                               = (107,000)

change in price = new price - original price

                          = $2,550 - $2,100

                          = $450

Step 4:

percentage change in quantity demanded:

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= (107,000) ÷ 416,500

= 0.2569 or (25.69%)

percentage change in price:

= change in price ÷ average price

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= 0.1935 or 19.35%

Step 5:

Price elasticity of demand:

= percentage change in quantity demanded ÷ percentage change in price

= 25.69 ÷ 19.35

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