Question

Question 3 (20 points) Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company Polvmerco Income Statement This vear ($000) Last vear ($000 Gross sales 25,421 24,224 Nil 24,224 Bad debt nil Net sales 25.421 COGS 22,243 21,341 Contribution margin 3.178 12.5 2,122 1,056 2,883 11.9 SG&A 2,067 816 ating income Other income and interest on 1 term debt -60 -50 Net income 996 766 What are your recommendations for the following situations? Do you have any concern? (a) if Polymerco's production is running at 84% capacity. (10 points) (b) if Polymerco's production is running at 100% capacity. (10 points)

Answer 1

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