Tony Manufacturing produces a single product that sells for $80
Tony Manufacturing produces a single product that sells for $80. Variable costs per unit equal $45. The company expects total fixed costs to be 580,000 for the next month at the projected sales level of 2500 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately Suppose management believes that a $90,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by to justify this additional expenditure?
Homework Answers
| Current Expected Position | |
| Projected Sales Level | 2500 |
| Sale Price | 80 |
| Variable Cost | 45 |
| Contribution Per unit | 35 |
| Total Contribution | 87500 |
| Estimated Fixed Cost | 80000 |
| Profit | 7500 |
| Position after change in Fixed Cost | |
| Fixed Cost (80000+90000) | 170000 |
| Minimum Required Profit | 7500 |
| Contribution Required | 177500 |
| Contribution Per Unit | 35 |
| Sales Required | 5072 |
| Increase in Sales required | 2572 |
| Hence, Sales must increase by 2572 units to justify the | |
| additional expenditure on Advertisment. |
Tony Manufacturing produces a single product that sells for $80. Variable costs per unit equal $45....
Tony Manufacturing produces a single product that sells for $80. Variable costs per unit equal $45. The company expects total fixed costs to be $80,000 for the next month at the projected sales level of 2500 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.Suppose management believes that a $90,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase...
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Tony Manufacturing produces a single product that sells for $110. Variable costs per unit equal $40. The company expects total fixed costs to be $82,000 for the next month at the projected sales level of 3000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. Suppose management believes that a $80,000 increase in the monthly advertising expense will result in a considerable increase in sales, Sales must...
Tony Manufacturing produces a single product that sells for $110. Variable costs per unit equal $40. The company ex...
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