Accounting Chapter 3 Sales Decrease 500 Units Next Month

158. If sales decrease by 500 units by next month, by how much would fixed expenses have to

be reduced to maintain the current net operating income?

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159. The company has an opportunity to secure a special order of 800 units if it is willing to

drop the selling price on these units to $13. Costs of securing the special order would be $1,000.

The special order would not affect the company’s regular sales. If the special order is accepted,

the company’s overall net operating income will:

Robledo Corporation produces and sells a single product. Data concerning that product

appear below:

Fixed expenses are $625,000 per month. The company is currently selling 9,000 units per month.

Consider each of the following questions independently.

160. This question is to be considered independently of all other questions relating to Robledo

Corporation. Refer to the original data when answering this question.

The marketing manager believes that a $7,000 increase in the monthly advertising budget would

result in a 100 unit increase in monthly sales. What should be the overall effect on the company’s

monthly net operating income of this change?

161. This question is to be considered independently of all other questions relating to Robledo

Corporation. Refer to the original data when answering this question.

Management is considering using a new component that would increase the unit variable cost by

$3. Since the new component would increase the features of the company’s product, the

marketing manager predicts that monthly sales would increase by 400 units. What should be the

overall effect on the company’s monthly net operating income of this change?

162. This question is to be considered independently of all other questions relating to Robledo

Corporation. Refer to the original data when answering this question.

The marketing manager would like to cut the selling price by $6 and increase the advertising

budget by $46,000 per month. The marketing manager predicts that these two changes would

increase monthly sales by 800 units. What should be the overall effect on the company’s monthly

net operating income of this change?

163. This question is to be considered independently of all other questions relating to Robledo

Corporation. Refer to the original data when answering this question.

The marketing manager would like to introduce sales commissions as an incentive for the sales

staff. The marketing manager has proposed a commission of $8 per unit. In exchange, the sales

staff would accept a decrease in their salaries of $57,000 per month. (This is the company’s

savings for the entire sales staff.) The marketing manager predicts that introducing this sales

incentive would increase monthly sales by 100 units. What should be the overall effect on the

company’s monthly net operating income of this change?

164. This question is to be considered independently of all other questions relating to Homme

Corporation. Refer to the original data when answering this question.

Management is considering using a new component that would increase the unit variable cost by

$16. Since the new component would increase the features of the company’s product, the

marketing manager predicts that monthly sales would increase by 500 units. What should be the

overall effect on the company’s monthly net operating income of this change?

165. This question is to be considered independently of all other questions relating to Homme

Corporation. Refer to the original data when answering this question.

The marketing manager believes that a $12,000 increase in the monthly advertising budget would

result in a 190 unit increase in monthly sales. What should be the overall effect on the company’s

monthly net operating income of this change?

166. This question is to be considered independently of all other questions relating to Homme

Corporation. Refer to the original data when answering this question.

The marketing manager would like to introduce sales commissions as an incentive for the sales

staff. The marketing manager has proposed a commission of $14 per unit. In exchange, the sales

staff would accept a decrease in their salaries of $24,000 per month. (This is the company’s

savings for the entire sales staff.) The marketing manager predicts that introducing this sales

incentive would increase monthly sales by 100 units. What should be the overall effect on the

company’s monthly net operating income of this change?

167. This question is to be considered independently of all other questions relating to Homme

Corporation. Refer to the original data when answering this question.

The marketing manager would like to cut the selling price by $18 and increase the advertising

budget by $8,000 per month. The marketing manager predicts that these two changes would

increase monthly sales by 700 units. What should be the overall effect on the company’s monthly

net operating income of this change?

Laro Corporation produces and sells a single product with the following characteristics:

The company is currently selling 5,000 units per month. Fixed expenses are $302,000 per month.

Consider each of the following questions independently.

168. This question is to be considered independently of all other questions relating to Laro

Corporation. Refer to the original data when answering this question.

Management is considering using a new component that would increase the unit variable cost by

$7. Since the new component would increase the features of the company’s product, the

marketing manager predicts that monthly sales would increase by 500 units. What should be the

overall effect on the company’s monthly net operating income of this change?

169. This question is to be considered independently of all other questions relating to Laro

Corporation. Refer to the original data when answering this question.

The marketing manager believes that a $7,000 increase in the monthly advertising budget would

result in a 110 unit increase in monthly sales. What should be the overall effect on the company’s

monthly net operating income of this change?

170. This question is to be considered independently of all other questions relating to Laro

Corporation. Refer to the original data when answering this question.

The marketing manager would like to cut the selling price by $13 and increase the advertising

budget by $17,000 per month. The marketing manager predicts that these two changes would

increase monthly sales by 1,200 units. What should be the overall effect on the company’s

monthly net operating income of this change?

171. This question is to be considered independently of all other questions relating to Laro

Corporation. Refer to the original data when answering this question.

The marketing manager would like to introduce sales commissions as an incentive for the sales

staff. The marketing manager has proposed a commission of $9 per unit. In exchange, the sales

staff would accept a decrease in their salaries of $40,000 per month. (This is the company’s

savings for the entire sales staff.) The marketing manager predicts that introducing this sales

incentive would increase monthly sales by 100 units. What should be the overall effect on the

company’s monthly net operating income of this change?

Budget data for the Bidwell Company are as follows:

172. Bidwell’s break-even sales in units is:

173. The number of units Bidwell would have to sell to earn a net operating income of

$150,000 is:

174. If fixed expenses increased $31,500, the break-even sales in units would be:

175. The unit sales to attain that the target profit of $36,000 is closest to:

176. Assume the company’s monthly target profit is $46,000. The dollar sales to attain that

target profit is closest to:

177. Assume the company’s monthly target profit is $25,000. The unit sales to attain that

target profit are closest to: