Stratford Company distributes a lightweight lawn chair that sells for $15 per unit. Variable expenses are 40% of sales, and fixed expenses total $198,000 annually. Required: Answer the following independent questions: 1. What is the product’s CM per unit? 2. Use the CM per unit to determine the break-even point in units. 3. The company estimates that sales will increase by $45,000 during the coming year due to increased demand. By how much should net operating income increase?
Stratford Company distributes a lightweight lawn chair that sells for $15 per unit. Variable expenses are 40% of sales, and fixed expenses total $198,000 annually. Required: Answer the following independent questions: 1. What is the product’s CM per unit? 2. Use the CM per unit to determine the break-even point in units. 3. The company estimates that sales will increase by $45,000 during the coming year due to increased demand. By how much should net operating income increase?
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 40P
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Question
Stratford Company distributes a lightweight lawn chair that sells for $15 per unit. Variable expenses are 40%
of sales, and fixed expenses total $198,000 annually.
Required:
Answer the following independent questions:
1. What is the product’s CM per unit?
2. Use the CM per unit to determine the break-even point in units.
3. The company estimates that sales will increase by $45,000 during the coming year due to increased
demand. By how much should net operating income increase?
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