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harkovskaia [24]
3 years ago
9

Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial

difficulty for some time. The company's contribution format income statement for the most recent month is given below:
Sales (12,900 units x $20 per unit) $ 258,000
Variable expenses 129,000
Contribution margin 129,000
Fixed expenses 144,000
Net operating loss $ (15,000)

Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $36,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?
Business
1 answer:
Nadusha1986 [10]3 years ago
5 0

Answer:

the revised net operating income is   $ 26,400

Explanation:

Effect the Changes on the Units, Selling Price and Fixed Cost as described on the Original Income Statement.

                          Revised Income Statement

Sales( (12,900 units x 2)× ($20 per unit×0.90))      $ 464,400

Variable expenses ( $10× (12,900 units x 2))         ($ 258,000)

Contribution margin                                                  $206,400

Fixed expenses (144,000  + $36,000 )                    ($180,000)

Net operating loss                                                     $ 26,400

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Answer:

Holmes should sell process the product further, because the profit if process further is higher than sell product now.

Explanation:

Net profit if sell product now is $37,500 ( = sales to another manufacturer $97,500 – already spent $60,000)

Sales as in process further/ Incremental Accounting

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3 years ago
ix company issued 16,000 shares of $10 par value common stock at a market price of $21. as a result of this accounting event, th
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Common stock will increase by $160,000, the par value, and paid-in capital in excess of par value will increase by $176,000, for a total increase in stockholders' equity of $336,000.

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