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Alexxx [7]
2 years ago
7

Thornbrough Corporation produces and sells a single product with the following characteristics: Per Unit Percent of Sales Sellin

g price $ 220 100 % Variable expenses 44 20 % Contribution margin $ 176 80 % The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month. Management is considering using a new component that would increase the unit variable cost by $11. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change
Business
1 answer:
DaniilM [7]2 years ago
6 0

Answer:

-$5,500

Explanation:

The computation of the overall effect on the company net operating income is as follows:

New Variable cost per unit is

= $44 + $11

= $55

Now the new contribution margin per unit is

= $220 - $55

= $165

New unit Monthly sales is

= 7,000 units + 500 units

= 7,500

Now

New total contribution margin :

= 7,500 units × $165

= $1,237,500

And, the Current total contribution margin is

= 7,000 units × $176

= $1,232,000

So, the change would be

= $1,232,000 - $1,237,500

= -$5,500

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4 0
3 years ago
Blossom Company purchased a new machine on October 1, 2017, at a cost of $66,000. The company estimated that the machine has a s
Ugo [173]

Answer:

Results are below.

Explanation:

Giving the following information:

Purchase price= $66,000

Salvage value= $5,700

Useful life= 6

F<u>irst, we need to calculate the annual depreciation using the following formula:</u>

<u></u>

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (66,000 - 5,700) / 6= 10,050

<u>2017:</u>

Annual depreciation= (10,050/12)*3= $2,512.5

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8 0
3 years ago
If a company would like to increase its degree of operating leverage it should?
dalvyx [7]

If a company would like to improve its degree of using leverage it should increase its Fixed Costs relative to its Variable Costs.

<h3>What is the relationship between variable cost and fixed cost with profit?</h3>

As they are time-related, or stable across time, fixed costs. Variable costs depend on volume and shift as the quantity of output does.

Variable costs are those that rise or fall in line with the volume of goods produced, while fixed costs remain constant regardless of output levels. Gross profit is significantly influenced by both fixed and variable costs; when production costs rise, gross profit decreases.

The amount of product generated determines the fluctuation in variable costs. Raw materials, labor, and commissions are examples of variable expenses. Regardless of the level of production, fixed expenses stay constant. Lease and rental payments, insurance, and interest payments are examples of fixed costs.

To learn more about variable cost and fixed cost refer to:

brainly.com/question/14872023

#SPJ4

8 0
1 year ago
Which of the following is true of viral marketing? It is the Internet version of word-of-mouth marketing. It refers to problems
Mice21 [21]

Answer:

Viral marketing is the Internet version of word-of-mouth marketing.

Explanation:

Viral Marketing is a term that can be best understood by considering the way a virus spreads continuously from one person to another and then to others.

Viral Marketing entails the <em>use of social media and other digital platforms or the internet to spread information.</em><em> </em>

It involves people coming in contact with an organization's marketing message and then sharing it with others who also share it with other people till it "goes viral".

5 0
3 years ago
News or program on TV. Reliable or relevant
allochka39001 [22]

Answer:

<u>Relevant</u>

Explanation:

News, and / or programs on TV, is how media, and the government gives information and influences people. It is relevant for the reason that outlets are trying to influence the viewers, but it is not always reliable. The news, and commercials shown on TV are not always reliable. Politicians may put things on TV, or news that is not necessarily true, or reliable. News outlets also do the same thing. News is notorious for spewing false information. And not only on our presidents an politicians. The point of news is to basically exaggerate things to get hold of the viewers attention more.

:))

5 0
3 years ago
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