Question

Check my work Selling Price $43.00 Sales Volume 2,200 3,200 Variable Cost 15 16 17 15 16 17 15 16 17 4,200 Profitability $ 14,400 42,400 $70,400 $98,400 $126,400 66,200 10,000 36, 000 62,000 88,000 114,000 60,400 56,200 52,000 (5,600) 22,400 50,400 78,400 106,400 (7,800) 19,200 46,200 73,200 100,200 5,200 6,200 Fixed Cost 47,200 47,200 47,200 57,200 57,200 57,200 67,200 67,200 67,200 12,200 39,200 93,200 120,200 4,400 2,200 32,400 29,200 -26,000 88,400 83,200 78,000 116,400 110,200 104,000 (10,000) 16,000 42,000 68,000 0 90 94,000 Required a. Determine the sales volume, fixed cost, and variable cost per unit at the break-even point. b. Determine the expected profit if Franklin projects the following data for Delatine: sales, 4,200 bottles; fixed cost, $47,200; and variable cost per unit, $17, c. Franklin is considering new circumstances that would change the conditions described in Required b. Specifically, the company has an opportunity to decrease variable cost per unit to $15 if it agrees to conditions that will increase fixed cost to $57,200. Volume is expected to remain constant at 4,200 bottles. Determine the effects on the company's profitability if this opportunity is accepted Complete this question by entering your answers in the tabs below RequiredA Required B Required C

Answer 1

Answer

• You have asked for Requirement ‘C’
• Net Income or Profitability as per Requirement ‘B’ will be $ 62,000

Sales	$180,600
Variable Cost	$71,400
Contribution margin	$109,200
Fixed Cost	$47,200
Net Income	$62,000

• Requirement ‘C’

New Net Income would be $ 60,400 [as per table given]. The same is calculated below

Sales	$180,600
Variable Cost	$63,000
Contribution margin	$117,600
Fixed Cost	$57,200
Net Income	$60,400

• Answer for Requirement ‘C’

Expected profit would DECREASE by $ 1,600 [62000 – 60400]