Sales (20,000 units @ 60 per unit) $1,200,000 Less: Variable cost 20,000@ $45 900,000 Contribution margin 300,000 Less fixed cost 240,000 Net income 60,000 In an effort to increase sales and profits, management is considering the use of a higher quality speaker. The higher quality speaker would increase variable costs by $3 per unit but management could eliminate one quality inspector who is paid a sala of $30,000 per year. The sales manager estimates that the higher quality speaker would increase annual sales by 20 percent. Assuming that the changes are made, what is the expected profit next year? O $280,000 O $290,000 O $270,000 O (240,000) O None of the above

Sales (20,000 units @ 60 per unit) $1,200,000 Less: Variable cost 20,000@ $45 900,000 Contribution margin 300,000 Less fixed cost 240,000 Net income 60,000 In an effort to increase sales and profits, management is considering the use of a higher quality speaker. The higher quality speaker would increase variable costs by $3 per unit but management could eliminate one quality inspector who is paid a sala of $30,000 per year. The sales manager estimates that the higher quality speaker would increase annual sales by 20 percent. Assuming that the changes are made, what is the expected profit next year? O $280,000 O $290,000 O $270,000 O (240,000) O None of the above

Name: Sales (20,000 units @ 60 per unit) $1,200,000Less: Variable cost 20,0
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Description: Sales (20,000 units @ 60 per unit) $1,200,000Less: Variable cost 20,000@ $45 900,000Contribution margin 300,000OLess fixed cost 240,000Net income 60,000In an effort to increase sales and profits, management is considering the use of a higher quality

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 8E

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