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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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For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. if you ea
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Average cost for a meal is $4.

<h3>Formula:</h3>

Average cost = Total cost/ no. of goods produced

In this case:

Avg. cost = $600/150 = $4

<h3>What is Average Cost ?</h3>
  • Calculating average cost, sometimes referred to as unit cost, requires multiplying the entire cost by the quantity of an item produced.
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2 years ago
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