Minded company introduced a new product lest yeas for which it is trying find an
ID: 2449940 • Letter: M
Question
Minded company introduced a new product lest yeas for which it is trying find an optimal selling price.Marketing studies that suggest that company can increase sales by 5000 unit for 2 reduction in the selling price. The company present selling price 70per unit and variable expenses are 40 per unit fixed expenses are540000 pet year. The present annual sales volume at 70 selling price is 15000 unitQuestion 1 What is the present yearly net operating income or loss?
Minded company introduced a new product lest yeas for which it is trying find an optimal selling price.Marketing studies that suggest that company can increase sales by 5000 unit for 2 reduction in the selling price. The company present selling price 70per unit and variable expenses are 40 per unit fixed expenses are540000 pet year. The present annual sales volume at 70 selling price is 15000 unit
Question 1 What is the present yearly net operating income or loss? Minden Company introduced a new product last year for which it is trying to find an optimal selling price Marketing studies suggest that the company selling price. The company's present selling price is $70 per unit, and variable expenses are $40 per Fixed expenses are can increase sales by 5,000 units for each $2 reduction in the unt expenses are $540,000 per year. The present annual sales volume (at the $70 selling price) is 15,000 units Required: 1. What is the present yearly net operating income or loss? Net operating loss $ 90.000 2. What is the present break-even point in unit sales and in dollar sales? Break-even point in units Break-even point in dollar sales $ 1260.000 18,000
Explanation / Answer
Ans-
Selling price 70/unit
Variable 40/unit
Fixed exp. 540000
Volume 15000 unit
1) Present yearly net operating income or loss
Sales (70*15000) 1050000
Less-Variable cost(40*15000) (600000)
Contribution 450000
Less-Fixed exp. (540000)
Net opreating loss 90000
2) Break even sales(in units)=Fixed exp./Contribution per unit
=540000/(70-40)
=18000
Break even sales(in dollars)=Fixed exp./Contribution*sales revenue
=(540000/45000)*1050000
=$1260000
3. Sales(15000*3*58) $ 2610000
Less-Variable cost(40*45000) (180000)
Contribution 810000
Less-Fixed exp. (540000)
Net opreating Profit $ 270000
4) Break even sales(in units)=Fixed exp./Contribution per unit
=540000/(58-40)
=30000
Break even sales(in dollars)=Fixed exp./Contribution*sales revenue
=(540000/810000)*2610000
=$1740000