Consider the following information:
Your company makes widgets. You are trying to figure out what volume (how many units) you need to sell in order to make a profit. You are also considering raising the sales price. Relevant information follows:
2018
Price: $25 per widget
Variable expenses per widget: $10
Fixed Expenses: $50,000
Sales at this price: 10,000 widgets
If you were to raise your price to $30 per widget, you would sell 8,000 widgets in 2019.
If you were to lower your price to $20 per widget, you would sell 12,500 widgets in 2019.
Should you raise the price, lower the price or keep it the same? Why? Show your calculations.
The correct answer has been presented in the supporting sheet. All the parts has been solved with detailed answer and explanation.
Consider the following information: Your company makes widgets. You are trying to figure out what volume...
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Acme Widget Company, based in Oregon, makes widgets for the US market. Each widget sells for $200 at retail (price that customers pay). Acme Widget, however, does not sell widgets directly to consumers. It has dealers who get a 35% dealer commission (off retail customer price of $200) for each widget they sell to end-user for $200. Each widget uses $5.15 of titanium; $26.75 worth of chips...
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Widget Inc, manufactures widgets. The company has the capacity to produce 100,000 widgets per year, but it currently produces and solls 75,000 widgets per year. The following information relates to current production Sales price per unit $41 Variable costs per unit: Manufacturing Marketing and administrative $26 $10 Total foxed costs Manufacturing $80,000 Marketing and administrative $24,000 If a special sales order is accepted for 6.500 widgets at a price of $38 per unit, and food costs...
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ill rate even if you only get 2/3 correct
your company manufaftjres widgets. the new widget will cost $10,000
and you estimate each year will cost $3,000. you plan to
manufacture them for 20 years at which point you will sell the
equipment for $2,000. the MARR is 10%, how much revenue do you need
to make each year for the annual worth of the project to be greater
than 0?
1. what isthe annualized value of the...
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Suppose that you have $14,000 to invest and you are trying to decide between investing in project A or project B. If you invest in project A, you will receive a payment of $16,500 at the end of 2 years. If you invest in project B, you will receive a payment of $25,000 at the end of 11 years. Assume the annual interest rate is 5 percent and that both projects carry no risk. Instructions: Round your...
You are the pricing manager for a bus tour company which sells tickets to tourists for bus tours of major cities. The current price for a bus tour is $10 per ticket. On average, you sell 10,000 tickets per month. You are contemplating raising the price for a ticket to $12 per ticket. You estimate that the number of tickets sold will fall to 9,000 tickets per month. Your variable costs are $3 per ticket. Your fixed costs are $50,000...
1) Your company, International Widget Manufacturers, is headquartered in New Orleans, but is considering expanding its operations to the west coast. It will cost $10 million to build a plant in California to make widgets, but if you do, you will be able to sell 1.5 million widgets per year for the next ten years. The project ends at that time. During the first year, your widgets will be priced at $1.00 each. They will cost 30 cents each to...
Required information [The following information applies to the questions displayed below.] Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost Per Unit Direct materials $ 6.80 Direct labor $ 4.30 Variable manufacturing overhead $ 1.60 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 3.80 Fixed administrative expense $ 2.20 Sales commissions $ 1.20 Variable administrative expense $ 0.45 2.For...
[The following information applies to the questions displayed below.] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed elling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost Per Unit $5.60 $3.10 $1.40 $4.00 $2.60 $2.20 $1.20 $0.45 8. If 12,500 units are produced, what is the average fixed...
Gilberto Company currently manufactures 50,000 units per year of
one of its crucial parts. Variable costs are $3.00 per unit, fixed
costs related to making this part are $50,000 per year, and
allocated fixed costs are $55,000 per year. Allocated fixed costs
are unavoidable whether the company makes or buys the part.
Gilberto is considering buying the part from a supplier for a
quoted price of $3.60 per unit guaranteed for a three-year period.
Calculate the total incremental cost of...
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Required information The following information applies to the questions displayed below Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses Net operating income s 75,000 45,000 30,000 22,800 $ 7,200 6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the...