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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 casuall mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719

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 casuall mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 89.1C: Ethics and Revenue Recognition Alan Spalding is CEO of a large appliance wholesaler. Alan is under...
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(a)  if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide?

Maximum discount= in %

In this case, will you have a negative impact on the profitability of the business? (yes or no)

(b)  if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the profitability? (in %)

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. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719
Transcribed Image Text: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. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719
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