Papaya Corporation has the following product information: Sales price $9.00per unit $5.00per unit Variable cost per Fixed cost $22,000month units per Volume 10,500month The company believes that the volume will go up to 13,000 units if the company reduces its sales price to $7.50. How would this change affect operating income? O It will decrease by $20,000. O It will increase by $9500. O It will decrease by $9500. O It will increase by $20,000. Next Previous

Papaya Corporation has the following product information: Sales price $9.00per unit $5.00per unit Variable cost per Fixed cost $22,000month units per Volume 10,500month The company believes that the volume will go up to 13,000 units if the company reduces its sales price to $7.50. How would this change affect operating income? O It will decrease by $20,000. O It will increase by $9500. O It will decrease by $9500. O It will increase by $20,000. Next Previous

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8EA: Marchete Company produces a single product. They have recently received the results of a market...

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Marchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?
Papaya Corporation has the following product rials information: Sales price %249.00per unit Variable cost $5.00per unit per Fixed cost $22,000month units per Volume 10,500month The company believes that the volume will go up to 13,000 units if the company reduces its sales price to %$7.50. How would this change affect operating income? O It will decrease by $20,000. O It will increase by $9500. O It will decrease by $9500. O It will increase by $20,000. Next.
XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000 to $500,000, but variable costs will decrease from $12 per unit to $10 per unitit were to implement these changes at its current production level of 50, 0 units (with no change to selling price ), profit would not change. What would happen to the company's profit if the changes were implemented and production decreased to 45,000 units? a- It will stay the same. b -It will increase . C-none of the given answers d -It will decrease .
The manufacturer of a product that a variable cost of $2.50 per unit and total fixed cost of $125,000 wants to determine the level of output necessary to avoid losses. a. what level of sales is necessary to break, even if the product is sold for $4.25? what will be the manufacturer's profit or loss on the sales of 1000,00 units? b.If fixed costs rise to $175,000, what is the new level of sales necessary to break even? c.If variable cost decline to $2.25 per unit, what is the new level of sales necessary to break even? d. If fixed cost were to increase to $17,000, while variable cost declined to $2.25 per unit, what is the new break-even level of sales? e. If a major proportion of fixed costs were noncahs (depreciation), would failure to achieve the break-even level of sales imply that the firm cannot pay its current obligation as they come due? Suppose $100,000 of the above fixed cost $125,000 werre depreciation expense. what level of sales would be the cash break-even level of sales?…
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Their current full cost for the product is $44 per unit.In order to meet the new target cost, how much will the company have to cut costs per unit, if any? a.$1 b.$2 c.$3 d.$0
XYZ Company is facing changes in its cost structure so that fixed costs will decrease from $600,000 to $500,000, but variable costs will increase from $12 per unit to $14 per unit. If it were to implement these changes at its current production level of 50,000 units (with no change to selling price), profit would not change. What would happen to the ?company's profit if the changes were implemented, and production decreased to 45,000 units It will decrease .a O none of the given answers.b O .It will stay the same .c O It will increase d O
XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000 to $500,000, but variable costs will decrease from $12 per unit to $10 per unit. If it were to implement these changes at its current production level of 50,000 units (with no change to selling price), profit would not change. What would happen to the company's profit if the changes were implementedand production decreased to 45,000 units? a. It will increase. b. It will decrease. c. It will stay the same. d. none of the given answers
Sprite company must decide on a make or buy decision. A supplier has offered to make the product at the same quality. Fixed marketing costs would be unaffected but variable marketing costs would be reduced by 30%. What is the maximum amount per unit that Sprite can pay the supplier without decreasing its operating income? P6.75 P9.75 P5.75 P5.05
XYZ company currently sells 15,000 units a month for $ 50 each , has variable costs of $ 20 per unit , and fored costs of $ 300,000 . The company is considering increasing the price of its units to $ 80 per unit . If the price is changed , how many units will the company need to sell for profit to remain the same as before the price change ? Select one . 10,000 . 7.500 9,000 d . 11.250 e None of the given answers .
XYZ Company is facing changes in its cost structure so that fixed costs will decrease from $800,000 to $700,000, but variable costs will increase from $10 per unit to $12 per unit. If it were to implement these changes at its current production level of 50,000 units (with no change to selling price )profit would not change. What would happen to the company's profit if the changes were implemented and production increased to 55,000 units?
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer's management desires a 12.5% profit margin on sales. Its current full cost for the product is $44 per unit.If the company cannot cut costs any lower than they already are, what would the profit margin on sales be to meet the market selling price?
Your Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales in units 3,000 Selling price per unit $309 Variable costs per unit: Production $130 Selling $50 Traceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000 If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the existing product lines is expected to drop $78,000 per year. What is the increase in net income if the new product is added next year? This is a reverse drop the segment. New CM is positive and new FC and lost CM are negative.