Problem 4
Problem No 5
Problem 6
Step-by-step explanation:
Given:
Units, u = 400,000 units
Cost of goods sold:
variable = 70%
fixed = 30%
Operating expenses:
variable = 60%
fixed = 40%
Cost of goods sold, C = $ 2,400,000
Operating expenses, O = $900,000
Sales, S = $4,000,000
Gross profit, G = $1,600,000
Net income, I = $700,000
Variable cost of goods sold, C1 = COGS × 70 %
= $ 2,590,000 x 65%
= 1,680,000
Variable cost per unit = Variable cost, C1/units
= 1,680,000 / 400,000
= $4.2 variable cost per unit
Variable Operating expenses, O1 = operating expenses, O × variable %
= $900,000 x 60%
=540,000
Variable operating expense per unit = variable operating expenses/units
= 540,000/400,000
= $1.35 variable cost per unit
Incremental analysis:
Given:
Number of kitchen gadget = 40,000
cost per 1 toaster = $6
Revenue, r = (40000 × 6)
= $240,000
Cost of Goods Sold, Cs = variable cost per unit × units of toasters
= (40,000 x 4.2)
= $168,000
Operating Expenses, Os = (variable operating expenses per unit × units of
toasters) + additional shipping costs
= (40,000 x 1.35) + 8,000
= $54,000 + $8,000
= $62,000
Net Income, N = revenue, r - (cost of goods sold, Cs + operating expenses,
Os)
= $240,000 - ($168,000 + $62,000)
= $10,000
B.
Accept the offer.
Problem 9