Question

Bush manufacturing produces a single product that sells for $100. variable costs per unit equal $25. the company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. in an attempt to improve performance, management is considering a number of alternative actions. each situation is to be evaluated separately

Answer 1

Question: Bush Manufacturing produces a single product that sells for $100. Variable costs per unit equal $...

Bush Manufacturing produces a single product that sells for $100. Variable costs per unit equal $25. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.

Suppose that management believes that a $24,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to justify this additional expenditure?

Suppose that management believes that a 20% reduction in the selling price will result in a 20% increase in sales. If this proposed reduction in selling price is implemented:

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Expert Answer

100% (2 ratings)

Answer Projected income statement for next month Figures in $ Particulars Units Per unit Amount % Selling price (a) 1000