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Eagle Sales has developed the following budgeted income statement. The company is experimenting with new engineering techniques and believes it can reduce variable cost to $4 per unit and significantly improve the product. The innovations would increase fixed cost to $10,000. The company expects to be able to maintain current sales (2,500 units). Assuming Eagle decides to pursue this strategy, by what amount would the budgeted profit ?change Sales Revenue (2,500 units x $10 sales price) Total Variable Expenses (2,500 x $6 per unit). Contribution Margin Fixed Expenses $25,000 (15,000) 10,000 (6.000) $4.000 Net Income decrease by $4,000 O increase by $4,000 decrease by $1,000 O decrease by $2,000 O increase by $1,000

Eagle Sales has developed the following budgeted income statement. The company is experimenting with new engineering techniques and believes it can reduce variable cost to $4 per unit and significantly improve the product. The innovations would increase fixed cost to $10,000. The company expects to be able to maintain current sales (2,500 units). Assuming Eagle decides to pursue this strategy, by what amount would the budgeted profit ?change Sales Revenue (2,500 units x $10 sales price) Total Variable Expenses (2,500 x $6 per unit). Contribution Margin Fixed Expenses $25,000 (15,000) 10,000 (6.000) $4.000 Net Income decrease by $4,000 O increase by $4,000 decrease by $1,000 O decrease by $2,000 O increase by $1,000

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 34P: Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming...
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Eagle Sales has developed the following budgeted income statement. The company is experimenting with new engineering techniques and believes it can reduce variable cost to $4 per unit and significantly improve the product. The innovations would increase fixed cost to $10,000. The company expects to be able to maintain current sales (2,500 units). Assuming Eagle decides to pursue this strategy, by what amount would the budgeted profit ?change Sales Revenue (2.500 units x $10 sales price) Total Variable Expenses (2,500 x S6 per unit). Contribution Margin Fixed Expenses Net Income S25,000 (15,000) 10,000 (6,000) $4.000 decrease by $4,000 ) increase by S4,000 decrease by $1,000 O decrease by $2,000 increase by $1,000
Transcribed Image Text:Eagle Sales has developed the following budgeted income statement. The company is experimenting with new engineering techniques and believes it can reduce variable cost to $4 per unit and significantly improve the product. The innovations would increase fixed cost to $10,000. The company expects to be able to maintain current sales (2,500 units). Assuming Eagle decides to pursue this strategy, by what amount would the budgeted profit ?change Sales Revenue (2.500 units x $10 sales price) Total Variable Expenses (2,500 x S6 per unit). Contribution Margin Fixed Expenses Net Income S25,000 (15,000) 10,000 (6,000) $4.000 decrease by $4,000 ) increase by S4,000 decrease by $1,000 O decrease by $2,000 increase by $1,000
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