Charleston Company produces a headset for kids. The following unit cost information is available: Selling price per game Variable costs per game $ 30.00 $ 18.00 90,000 units $360,000 Current annual sales Current fixed costs The sales manager proposes that for next year, Charleston should reduce the selling price by 5%, increase the quality of direct materials, and increase advertising spending to drastically increase unit sales. The manager expects the following : Proposed new price $28.50 Required increase in advertising spending New Variable costs per game 24 20,000 2$ 20.00 Increase in unit sales 40% 12 How will net income be impacted? A. Net income will increase by 2$ $ 20,000 2$ $ 29,000 9,000 B. Net income will decrease by C. Net income will increase by 11,000 D. Net income will decrease by E. None of the Above LO26 13

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 2CMA
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Please I want to learn how to make these problems with a good explanation. One of  those there is the possible answer.

I need only question 12

Thank you

 

Nashville Sports, Inc., produces high-quality sports equipment and sell their product through their own retail
outlets. The company manufactures two dumbbells-the Light and the Heavy. Selected information on the
dumbbells is given below:
Light
Heavy
180.00
Selling price per a pair of dumbbells
Variable expenses per pair:
%24
100.00 $
Production
52.00 $
72.00
Sales commission
8%
10% of price
Total Fixed Cost (for Light and Heavy together)
$ 147,000
11 The company plans to produce and sell three times as many Light model as Heavy model next month. How
units
many
of Light and Heavy models in total does the company have to sell to break even? (Choose the closest answer.)
А.
2,100 units
2,178 units
2,800 units
В.
С.
D.
3,015 units
E.
None of the above
Charleston Company produces a headset for kids. The following unit cost information is available:
Selling price per game
Variable costs per game
$ 30.00
$ 18.00
90,000 units
$360,000
Current annual sales
Current fixed costs
The sales manager proposes that for next year, Charleston should reduce the selling price by 5%, increase the quality of
direct materials, and increase advertising spending to drastically increase unit sales. The manager expects the following:
Proposed new price
$28.50
Required increase in advertising spending
New Variable costs per game
2$
20,000
2$
20.00
Increase in unit sales
40%
12 How will net income be impacted?
A. Net income will increase by
%24
9,000
$ 20,000
B. Net income will decrease by
C. Net income will increase by
$ 11,000
$ 29,000
D. Net income will decrease by
E. None of the Above
%24
Transcribed Image Text:Nashville Sports, Inc., produces high-quality sports equipment and sell their product through their own retail outlets. The company manufactures two dumbbells-the Light and the Heavy. Selected information on the dumbbells is given below: Light Heavy 180.00 Selling price per a pair of dumbbells Variable expenses per pair: %24 100.00 $ Production 52.00 $ 72.00 Sales commission 8% 10% of price Total Fixed Cost (for Light and Heavy together) $ 147,000 11 The company plans to produce and sell three times as many Light model as Heavy model next month. How units many of Light and Heavy models in total does the company have to sell to break even? (Choose the closest answer.) А. 2,100 units 2,178 units 2,800 units В. С. D. 3,015 units E. None of the above Charleston Company produces a headset for kids. The following unit cost information is available: Selling price per game Variable costs per game $ 30.00 $ 18.00 90,000 units $360,000 Current annual sales Current fixed costs The sales manager proposes that for next year, Charleston should reduce the selling price by 5%, increase the quality of direct materials, and increase advertising spending to drastically increase unit sales. The manager expects the following: Proposed new price $28.50 Required increase in advertising spending New Variable costs per game 2$ 20,000 2$ 20.00 Increase in unit sales 40% 12 How will net income be impacted? A. Net income will increase by %24 9,000 $ 20,000 B. Net income will decrease by C. Net income will increase by $ 11,000 $ 29,000 D. Net income will decrease by E. None of the Above %24
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