Westside produces pillows with monthly unit sales and costs given as:  Unit Sales: 4000 units...

Westside produces pillows with monthly unit sales and costs given as:  Unit Sales: 4000 units  Price: $10.00 per unit  Variable costs: $5.50 per unit  Fixed costs: $15,000

1. Westside is considering a 5% price cut without additional fixed cost. By what % would sales need to increase to keep profit constant for the 5% price cut?

2. Replacing goose feathers with synthetic filler will decrease the unit variable cost by $0.22. By what % would sales have to increase to assure the 5% price cut?

3. Given the production capacity of 4,000, the company has to install another workstation at a monthly cost of $800 (assume no change of variable costs). The new station raises plant capacity by 1,000 units. By what % would sales have to increase to justify a 5% price cut?

Expert Solution

ekkarill92 answered 3 weeks ago

THIS IS FOR PRICING NOT FINANCE Westside produces pillows with monthly unit sales and costs given...

THIS IS FOR PRICING NOT FINANCE Westside produces pillows with monthly unit sales and costs given as:  Unit Sales: 4000 units  Price: $10.00 per unit  Variable costs: $5.50 per unit  Fixed costs: $15,000 1.Replacing goose feathers with synthetic filler will decrease the unit variable cost by $0.22. By what % would sales have to increase to assure the 5% price cut?

Given Sales in units 10,000 Variable manufacturing costs per unit 5 Variable administrative costs per unit...

Given Sales in units 10,000 Variable manufacturing costs per unit 5 Variable administrative costs per unit 2 Fixed manufacturing costs per unit 2 Fixed administrative costs per unit 1 Variable costs 75% of sales Selling price per unit? $2.22 $9.33 $17.50 $20 Given for XM Company the following data for January 20X1. Direct material purchased and used in production accounted for $ 50000 Units purchased 5000 The standard units 4200 Managers estimate price variance not to exceed +1% of the...

Oven coffee fan Annual sales (units) 80000 4000 4000 Direct materials cost per unit 25 45...

Oven coffee fan Annual sales (units) 80000 4000 4000 Direct materials cost per unit 25 45 85 Direct labor cost per unit 15 30 30 Direct labor hours (DLH) per unit 1 2 2 The company has budgeted its annual indirect costs to be $8,736,000. For the past 5 years, the company’s pricing formula has been to set each appliance’s target price at 125% of its unit product cost. Recently, however, the microwave oven has come under increasing price pressure...

Sales price per unit: (current monthly sales volume is 120,000 units). . . . $25.00 Variable...

Sales price per unit: (current monthly sales volume is 120,000 units). . . . $25.00 Variable costs per unit: Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.60 Direct labor. . . . . . . . . . . . . . . ....

Patsy’s Pillows produces and sells a decorative pillow for $50 per unit. In its first month...

Patsy’s Pillows produces and sells a decorative pillow for $50 per unit. In its first month of operation, the company produced 5,000 pillows and sold 3,000 pillows. There were no beginning inventories. Cost information for the month was as follows: Variable Manufacturing Costs = $20/unit produced Variable Marketing Costs = $10/unit sold Fixed Manufacturing Costs = $60,000 Fixed Administrative Expense = $15,000 1.What is the value of ending inventory using variable costing? 2.What is the value of ending inventory using...

A company produces a given commodity. Production costs are $10 per unit. The demand function for...

A company produces a given commodity. Production costs are $10 per unit. The demand function for this commodity is given by q = −2p + 1200, where q is the quantity demanded, and p is the selling price per unit. (a) Find the cost function C(q), and rewrite is as a function of the selling price p (that is, replace q by q = −2p + 1200). (b) Find the revenue function as a function only of the selling prince...

Martinez Company’s relevant range of production is 10,300 units to 15,300 units. When it produces and sells 12,800 units, its unit costs are as follows:

Martinez Company’s relevant range of production is 10,300 units to 15,300 units. When it produces and sells 12,800 units, its unit costs are as follows: AmountPer Unit Direct materials $ 5.60 Direct labor $ 3.10 Variable manufacturing overhead $ 1.40 Fixed manufacturing overhead $ 3.60 Fixed selling expense $ 2.60 Fixed administrative expense $ 2.20 Sales commissions $ 1.20 Variable administrative expense $ 0.45 13. If the selling...

Sales (in units) 60,000 Selling price per unit $25 Manufacturing costs per unit: Materials 5 Direct...

Sales (in units) 60,000 Selling price per unit $25 Manufacturing costs per unit: Materials 5 Direct labor 4 Overhead Variable 4 Fixed 6 Total $19 Gross margin 6 Selling and admin. Expenses per unit 2 Operating income $4 A company in a foreign market offer to buy and the offer specifies the following data units to be sold 10,000 price per unit $12 The incremental profit should be

Alberts Enterprises has sales of 3,000 units at $80 per unit. Variable costs are 35% of...

Alberts Enterprises has sales of 3,000 units at $80 per unit. Variable costs are 35% of the sales price. If total fixed costs are $66,000, what is the the degree of operating leverage?

Harrison Enterprises currently produces 8,000 units of part B13. Current unit costs for part B13 are...

Harrison Enterprises currently produces 8,000 units of part B13. Current unit costs for part B13 are as follows: Direct materials $12 Direct labor 9 Factory rent 7 Administrative costs 10 General factory overhead (allocated) 7 Total $45 If Harrison decides to buy part B13, 50% of the administrative costs would be avoided. All of the company’s items, including part B13, are manufactured in the same rented production facility. The company has an offer from a wholesaler that wishes to sell...

Question