2-a.
Current Situation
Income Statement | |
Sales ( 4,200 x 60) | 252,000 |
Variable cost ( 4,200 x 39) | -163,800 |
Contribution margin | 88,200 |
Fixed cost | -72,000 |
Net Operating Income | $16,200 |
Proposed situation
Increase in variable cost per unit = $4
Variable cost per unit = 39+4
= $43
Increase in sales = 25%
= 4,200 x 25%
= 1,050 units
Sales quantity = 4,200+1,050
= 5,250 units
Income Statement | |
Sales ( 5,250 x 60) | 315,000 |
Variable cost ( 5,250 x 43) | -252,750 |
Contribution margin | 89,250 |
Fixed cost | -72,000 |
Net Operating Income | $17,250 |
Increase in net income = 17,250-16,200
= $1,050
2-b.
Higher quality component should be used since it will increase net operating income by $1,050.
Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.
Thanks!!!
Data for Hermann Corporation are shown below: Per Unit Selling price $ 60 Variable expenses Contribution...
Data for Hermann Corporation are shown below: Per Unit $ 130 Selling price Variable expenses Contribution margin Percent of Sales 100% 60 404 Fixed expenses are $86,000 per month and the company is selling 2,800 units per month 2-a. Refer to the original dato. How much will net operating income increase (decrease) per month if the company uses higher quality components that increase the variable expense by $6 per unit and increase unit sales by 15%. 2-b. Should the higher-quality...
Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 80 52 Percent of Sales 100% 65 35% $ 28 Fixed expenses are $76,000 per month and the company is selling 4.600 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $5 per unit and increase unit sales by 25%. 2-b....
Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 90 63 Percent of Sales 100% 70 $ 27 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $2 per unit and increase unit sales by 10%. 2-b. Should...
Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 60 39 $ 21 Percent of Sales 100% 65 35% Fixed expenses are $72,000 per month and the company is selling 4,200 units per month. Exercise 2-5 (Algo) Part 2 2-a. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. 2-b. Should...
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 70 100 % Variable expenses 49 70 Contribution margin $ 21 30 % Fixed expenses are $74,000 per month and the company is selling 4,400 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 25%....
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 100 100 % Variable expenses 61 61 Contribution margin $ 39 39 % Fixed expenses are $80,000 per month and the company is selling 3,700 units per month. 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,500 and monthly sales increase by $17,500? 1-b. Should the advertising budget be increased? 2-a. Refer to the original...
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 80 100 % Variable expenses 44 55 Contribution margin $ 36 45 % Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. Garrison 16e Rechecks 2017-05-02 Exercise 5-5 Part 2 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4...
Data for Hermann Corporation are shown below: Percent of Sales 100% 64 Per Unit $125 80 $ 45 Selling price Variable expenses Contribution margin 366 Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000 and monthly sales increase by $20,000? 1-b. Should the advertising budget be increased? Complete this question by entering your answers...
Required information [The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Percent of Sales 100% Selling price Variable expenses Contribution margin Per Unit $ 115 69 $ 46 60 40% Fixed expenses are $83,000 per month and the company is selling 2.500 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by...
Required information [The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 90 63 $ 27 Percent of Sales 100% 70 30% Fixed expenses are $78,000 per month and the company is selling 3,500 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by...