Question

The manager of Calypso, Inc. is considering raising its current price of $34 per unit by 10%. If she does so, she estimates that demand will decrease by 20,000 units per month. Calypso currently sells 51,100 units per month, each of which costs $23 in variable costs. Fixed costs are $190,000.

a. What is the current profit?

b. What is the current break-even point in units? (Round your answer to the nearest whole number.)

c. If the manager raises the price, what will profit be? (Do not round intermediate calculations.)

d. If the manager raises the price, what will be the new break-even point in units? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

e. Assume the manager does not know how much demand will drop if the price increases. By how much would demand have to drop before the manager would not want to implement the price increase? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

Answer 1

Current contrybution per unit = sales price - variable cost = $34 - $23 = $11
New contrybution per unit = sales price - variable cost = $34 +10% of $34 - $23 = $37.40 -$23 = $14.40
a. Current Profit
Current profit = Contrybution - fixed cost
	= $11 * 51,100 units - $190,000
	=   $372,100
b. Current Breakeven points in units
Current Breakeven points in units =                     Fixed costs
				Contrybution per unit
			=                    $190,000
				$11
			=                  17272.73
			=                  17273 units
c. New profit
New profit =   New contrybution - Fixed costs
	=      $14.40 * (51,100-20,000) - $190,000
	=       $14.40 * 31,100 units - $190,000
	=        $447,840 -$190,000
	=       $257,840
d. New break-even point in units
New   Breakeven point in   units =                     Fixed costs
				Contrybution per unit
			=                        $190,000
				$14.40
			=                  13,194.44
			=                  13,194 units
e. Drop in demand would be
Lets take no.of units to be X , to get same Current profit after change in sale price
$372,100 = $14.40 * X units - $190,000
$372,100 + $190,000 = $14.40X
$562,100 / $14.40 = X									ekkarill92 Next > < Previous Related Solutions The manager of Calypso, Inc. is considering raising its current price of $35 per unit by... The manager of Calypso, Inc. is considering raising its current price of $35 per unit by 10%.If she does so, she estimates that demand will decrease by 20,000 units per month. Calypso currently sells 50,600 units per month, each of which costs $21 in variable costs. Fixed costs are $197,000. a. What is the current profit? b. What is the current break-even point in units? (Round your answer to the nearest whole number.) c. If the manager raises the price,... Please answer form a to e (all questions) The manager of Calypso, Inc. is considering raising... Please answer form a to e (all questions) The manager of Calypso, Inc. is considering raising its current price of $34 per unit by 10%. If she does so, she estimates that demand will decrease by 20,000 units per month. Calypso currently sells 50,100 units per month, each of which costs $21 in variable costs. Fixed costs are $200,000. a. What is the current profit? b. What is the current break-even point in units? (Round your answer to the nearest... 25. A. If fixed costs are $256,000, the unit selling price is $34, and the unit... 25. A. If fixed costs are $256,000, the unit selling price is $34, and the unit variable costs are $18, what is the break-even sales (units) if fixed costs are reduced by $33,600? a. 13,900 units b. 20,850 units c. 16,680 units d. 11,120 units 25. B If sales totaled $665,288 for the year (83,161 units at $8 each) and the planned sales totaled $848,276 (77,116 units at $11 each), the effect of the quantity factor on the change in... Assume the following (1) selling price per unit = $34, (2) total fixed expenses = $9,074,... Assume the following (1) selling price per unit = $34, (2) total fixed expenses = $9,074, (3) the contribution margin ratio = 33%, and (4) net operating income = $10,000. Given these four assumptions, unit sales must be: Multiple Choice 1,139 units. 561 units. 2,278 units. 1,700 units. Assume the following (1) selling price per unit = $25, (2) variable expense per unit = $13, (3) the total fixed expenses = $15,400, and (4) net operating income = $17,900. Given... Intercontinental, Inc., provides you with the following data for its single product: Sales price per unit... Intercontinental, Inc., provides you with the following data for its single product: Sales price per unit $ 51.00 Fixed costs (per month): Selling, general, and administrative (SG&A) 900,000 Manufacturing overhead 1,800,000 Variable costs (per unit): Direct labor 6.00 Direct materials 13.00 Manufacturing overhead 9.00 SG&A 5.00 Number of units produced per month 300,000 units Required: Compute the amounts for each of the following assuming that both production levels are within the relevant range. (Do not round intermediate calculations. Round your... Intercontinental, Inc., provides you with the following data for its single product: Sales price per unit... Intercontinental, Inc., provides you with the following data for its single product: Sales price per unit $ 50.00 Fixed costs (per month): Selling, general, and administrative (SG&A) 1,800,000 Manufacturing overhead 2,700,000 Variable costs (per unit): Direct labor 7.00 Direct materials 12.00 Manufacturing overhead 9.00 SG&A 4.00 Number of units produced per month 300,000 units Required: Compute the amounts for each of the following assuming that both production levels are within the relevant range. (Do not round intermediate calculations. Round your... Intercontinental, Inc., provides you with the following data for its single product: Sales price per unit... Intercontinental, Inc., provides you with the following data for its single product: Sales price per unit $ 51.00 Fixed costs (per month): Selling, general, and administrative (SG&A) 1,800,000 Manufacturing overhead 2,700,000 Variable costs (per unit): Direct labor 7.00 Direct materials 12.00 Manufacturing overhead 9.00 SG&A 6.00 Number of units produced per month 300,000 units Required: Compute the amounts for each of the following assuming that both production levels are within the relevant range. (Do not round intermediate calculations. Round your... 2.) Harry Company sells 27,000 units at $34 per unit. Variable costs are $21.08 per unit,... 2.) Harry Company sells 27,000 units at $34 per unit. Variable costs are $21.08 per unit, and fixed costs are $160,500. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations. a. Contribution margin ratio (Enter as a whole number.) % b. Unit contribution margin (Round to the nearest cent.) $ per unit c. Income from operations $ 3.) Megan Company has fixed costs of $505,920. The unit selling price, variable cost per unit,... decor Ltd has the following figures regarding its inventory. cost price per unit $50 per unit... decor Ltd has the following figures regarding its inventory. cost price per unit $50 per unit , . storage cost per unit $5 per unit,    annual usage 100 000 units, normal delivery time $2.5 weeks, insurance cost per unit $5 per unit, interest rate is 9%, ordering cost per unit $80, safety stock 5000 unit. There are 50 normal working weeks per year and four weeks per month. REQUIRED: 1. calculate the economic order quantity(EOQ). 2. calculate the number of... Finding price per unit Rooney Manufacturing Co. expects to make 31,700 chairs during the year 1 accounting period. The company made 3,600 chairs in January. Materials and labor costs for January were $16,700 and $25,200, respectively. Rooney produced 2,000 chairs in February. Material and labor costs for February were $8,900 and $13,400, respectively. The company paid the $729,100 annual rental fee on its manufacturing facility on January 1, year 1. The rental fee is allocated based on the total estimated number of units to... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Derek plans to retire on his 65th birthday. However, he plans to work part-time until he... Toady and Froggy were running a vegan cafe together. The business was having financial difficulties.Betelguese, who... 1. The following questions concern Jesse Gelsinger who suffered from partial OTC.             a. In the... Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales... TzeMay was one of the first women engineering students at ABC University. She graduated in 1995... Use the following information to calculate these various solvency measures:    a) NWC, B) WCR, c) Current... The files SpeedControl.java and SpeedControlPanel.java contain a program (and its associated panel) with a circle that... ADVERTISEMENT About @ 2020 WizEdu