1. Business
  2. Accounting
  3. upa adapted 2411 effect of product mlx variation the officers...

Question: upa adapted 2411 effect of product mlx variation the officers...

Question details

UPA adapted 24-11. Effect of product mlx variation. The officers of the Herbert Company reviewed the ability of the companys four products and the potential effect of several proposals for va product mix. An excerpt from the years income statement and other data follows varying the PROOUGT TOTAL P Sales. Cost of goods sold .. Gross profit. Operating expense. $62,600 S10,000 $18,000 $12.600 $22.000 44.274 4,750 7.05 13,968 18,500 $18.326 5,250 S10.944 $(1.368) 3.500 4,220 Profit before income tax.. Units sold Sales price per unit . Variable cost of goods sold per unit Variable operating expense per unit 12,012 990 2.976 2.826 8,314 $ 3,260 $ 7.968 (4.194) 1,000 1,200 1.800 $2.50 $3.00 6.50 720) 2,000 $10.00 $15.00 $7.00 $11.00 6.00 1,17 $1.25 1.00 $1.20 The total fixed cost is not expected to fluctuate as a result of changes under consideration Required: (1) The eftect on profit if R is discontinued (2) The effect on profit if R is discontinued and if a consequent loss of customers causes a (3) The effect on profit if Rs sales price is increased to $8, and the number of units sold decrease of 200 units in sales of Q decreases to 1,500 with no effect on the other products (4) The effect on profit if a new product, T, is introduced and R is discontinued with no effect on the other products. (The total variable cost per unit of Product T would be $8.05, and 1,600 units can be sold at $9.50 each. The plant in which R is produced can be utilized to produce T.) (5) The effect on profit if production of P is reduced to 500 units (to be sold at $12 each) and if production of S is increased to 2,500 units (to be sold at $10.50 each). (Part of the plant in which P is produced can easily be adapted to produce S, but changes in quantities make changes in the sales price advisable.) (6) The effect on profit if production of P is increased by 1,000 units to be sold at $10 each by adding a second shift. (Higher wages must be paid, thus increasing the variable cost goods sold per unit to $3.50 for each additional unit.) of (AICPA adapted] cor anias are each nroduciea and selling annualy

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution