Pharoah's managers have determined that variable costs per unit will increase by 20% beginning next month. To offset this increase in costs, they are considering a 12% increase the sales price. Market research indicates that the price increase will result in a 3% decrease in the number of learning systems Pharoah sells. What will be Pharoah's expected operatin income if the price increase is implemented?Current Attempt in Progress Pharoah sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month is as follows: (a)

Pharoah's managers have determined that variable costs per unit will increase by 20% beginning next month. To offset this increase in costs, they are considering a 12% increase the sales price. Market research indicates that the price increase will result in a 3% decrease in the number of learning systems Pharoah sells. What will be Pharoah's expected operatin income if the price increase is implemented?Current Attempt in Progress Pharoah sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month is as follows: (a)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hyperion, Inc. currently sells its latest high-speed colour printer, the Hyper 500, for $371. It plans to lower the price to $318 next year. Its cost of goods sold for the Hyper 500 is $212 per unit, and this year's sales are expected to be 21,000 units. a. Suppose that, if Hyperion drops the price to $318 immediately, it can increase this year's sales by 27% to 26,670 units. What would be the incremental impact on this year's EBIT of such a price drop? b. Suppose that, for each printer sold, Hyperion expects additional sales of $78 per year on ink cartridges for the three years, and Hyperion has a gross profit margin of 61% on ink cartridges. What is the incremental impact on EBIT for the next three years of a price drop this year?
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Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its online website. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (b) When is target costing particularly helpful in deciding whether to produce a given product?
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K Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza that will be low in cholesterol and contain no trans fats. The firm expects that sales of the new pizza will be $24 million per year. While many of these sales will be to new customers, Pisa Pizza estimates that 30% will come from customers who switch to the new, healthier pizza instead of buying the original version. a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? b. Suppose that 40% of the customers who will switch from Pisa Pizza's original pizza to its healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this case? a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? The…
1. Your company has an opportunity to enhance its plastic product by adding a new feature. To make the feature, you need a new injection molding machine costing $100,000. On a per unit basis the cost of the unit increases by $3.00. You expect to be able to sell it for an additional $4.00 per unit. Sales believes that the sales will be 150,000 per year for the next five years. a. What is the ROI time? Determine the answer mathematically and show your manager a graphical representation.
Phlight Restaurant is considering a delivery service. The firm expects that sales from the new service will be $150,000 per year. Phlight currently offers a sit-down service with annual sales of $100,000. While many of the delivery sales will be to new customers, Phlight estimates that 60% of their current sit-down customers will switch and use the delivery service. The level of incremental sales associated with introducing the delivery service is closest to: Select one: a. $90,000 b. $150,000 c. $60,000 d. $120,000
The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data: Product Demand Next year (units) Debbie Trish Sarah Mike Sewing kit Selling Price per Unit $ 15.50 $ 6.00 51,000 43,000 $ 25.00 36,000 40,000 $ 11.00 326,000 $ 8.10 The following additional information is available: Direct Materials $ 4.40 $ 1.20 $6.59 $ 2.10 $ 3.30 Direct Labor $ 2.70 $ 1.20 $ 4.50 $ 3.30 $0.90 a. The company's plant has a capacity of 118,450 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labor rate of $6 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $530,000 per year. Variable overhead costs are $3 per direct labor-hour. d. All of the…
A chain of take-away pizza stores is considering introducing a new line of gluten-free pizzas. Net revenue from the new line of pizzas is expected to total $500,000 per year, but 15% of this net revenue is forecast to consist of people switching from the regular pizzas to the gluten-free pizzas. How would you describe this situation in terms of the NPV analysis upon which the situation will be based. Question 1Answer a. There is a negative externality equal to $425,000 which should be included in the NPV analysis for the gluten-free pizza project. b. There is a positive externality equal to $425,000 which should be included in the NPV analysis for the gluten-free pizza project. c. There is a positive externality equal to $75,000 which should be included in the NPV analysis for the gluten-free pizza project. d. There is a negative externality equal to $75,000 which should be included in the NPV analysis for the gluten-free pizza project.
C-Cubed makes bikes. It's standard bike is called the Speed Racer. It's Contribution Margin Income Statement for 2020 when it sold 350 bikes is as follows: Sales $175,000 64.750 Less: Variable Expenses Contribution Margin Less: Fixed Expenses Net Operating Income In 2021, C-Cubed is thinking that it can increase its sales to 375 if it takes the following actions: 1) cuts its sales price by $100 per bike and 2) switches to a more fixed pay structure for its sales people by eliminating the $35 per unit sales commission and increasing its selling salaries by $5,000. What would be profit impact of these changes? 110,250 27,000 $83,250 Multiple Choice $21,500 decrease $25,250 decrease $20,625 decrease $30.000 decrease