Question

Question Help common P7-65A (similar to) Home Sewing Company is currently seling 3,600 oversized bean bag chairs a month at a price of $80 per chair. The variable cost of each chair sold includes $35 to purchase the bean bag chains from suppliers and a costs are $5,000 per month. The company is considering making several operwtional changes and wants to know how the charge will impact its operating income Read the resuirements Operating income (0) Operating income from implementing these changes would decrease by $ 3.744 from Requirement 1. b. Anerative 2: The company believes that spending an additional $7,000 on advertising would increase als volume by 13%. (Use parentheses or a minus 325,440 Home Seating Company Contribution Margin Income Statement Ses revenue $ Variable expenses Cost of goods sold Operating expenses Contritation margin Fred expenses Operating income ) Entorary number in the edit fields and then click Check Answer Check Answer Clear All

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Answer 1

1	Sales Revenue	288000
	Variable expenses
	Cost of goods sold	126000
	Operating expenses	25200
	Contribution margin	136800
	Fixed expenses	5000
	Operating Income (Loss)	131800
		Alternative 1
2a)	Sales Revenue	322560
	Variable expenses
	Cost of goods sold	141120
	Operating expenses	43200
	Contribution margin	138240
	Fixed expenses	5000
	Operating Income (Loss)	133240
	Operating income from implementing these change would increase by $1440 from Requirement 1
2b)		Alternative 2
	Sales Revenue	325440
	Variable expenses
	Cost of goods sold	142380
	Operating expenses	28476
	Contribution margin	154584
	Fixed expenses	12000
	Operating Income (Loss)	142584
	Operating income from implementing these change would increase by $24784 from Requirement 1
2c)		Alternative 3
	Sales Revenue	294120
	Variable expenses
	Cost of goods sold	108360
	Operating expenses	21672
	Contribution margin	164088
	Fixed expenses	5000
	Operating Income (Loss)	159088
	Operating income from implementing these change would increase by $27288 from Requirement 1
2d)		Alternative 4
	Sales Revenue	370944
	Variable expenses
	Cost of goods sold	173376
	Operating expenses	28224
	Contribution margin	169344
	Fixed expenses	6000
	Operating Income (Loss)	163344
	Operating income from implementing these change would increase by $33544 from Requirement 1