Wertman Corporation produces and sells a single product with the fol... Wertman Corporation produces and sells a single product with the following characteristics: Per Unit Percent of Sales Selling price $227 100% Variable expenses 110 48% Contribution margin $ 117 52% The company is currently selling 2,200 units per month. Fixed expenses are $221,000 per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $18 per unit. In exchange, the sales staff would accept a decrease in their salaries of $72,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 376 units. What should be the overall effect on the company's monthly net operating income? Increase by $73,624 Decrease by $71,624 Increase by $69,624 Increase by $75,624

 Wertman Corporation produces and sells a single product with the fol...

Wertman Corporation produces and sells a single product with the following characteristics:

	Per Unit	Percent of Sales
Selling price	$227	100%
Variable expenses	110	48%
Contribution margin	$ 117	52%

The company is currently selling 2,200 units per month. Fixed expenses are $221,000 per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $18 per unit. In exchange, the sales staff would accept a decrease in their salaries of $72,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 376 units. What should be the overall effect on the company's monthly net operating income?

 

	Increase by $73,624
	Decrease by $71,624
	Increase by $69,624
	Increase by $75,624

 

Answer
Increase by $69,624

Hounshell Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $ 123.00 Variable expense per unit $ 49.60 Fixed expense per month $ 265,580 ________________________________________ Required: a. Assume the company’s monthly target profit is $20,680. Determine the unit sales to attain that target profit. Unit sales to attain target profit units b. Assume the company’s monthly target profit is $6,460. Determine the dollar sales to attain that target profit. (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Dollar sales to attain target profit $ Explanation: Per Unit Percent of Sales Selling price per unit $ 123.00 100% Variable expense per unit 49.60 40% ________________________________________ ________________________________________ ________________________________________ Contribution margin per unit and CM ratio $ 73.40 60% ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ a. Unit sales to attain target profit = (Target profit + Fixed expenses) / Unit CM = ($265,580 + $20,680)/$73.40 = 3,900 b. Dollar sales to attain target profit = (Target profit + Fixed expenses) / CM ratio = ($265,580 + $6,460)/0.60 = $453,400

Problem 6-202 [LO5]

Hounshell Corporation produces and sells a single product. Data concerning that product appear below:

 

Selling price per unit	$	123.00
Variable expense per unit	$	49.60
Fixed expense per month	$	265,580

Required:

a.	Assume the company’s monthly target profit is $20,680. Determine the unit sales to attain that target profit.

 

Unit sales to attain target profit

units

 

b.	Assume the company’s monthly target profit is $6,460. Determine the dollar sales to attain that target profit. (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

 

Dollar sales to attain target profit

$

Explanation:

	Per Unit		Percent of Sales
Selling price per unit	$	123.00	100%
Variable expense per unit		49.60	40%
Contribution margin per unit and CM ratio	$	73.40	60%

 

a.

 

Unit sales to attain target profit = (Target profit + Fixed expenses) / Unit CM = ($265,580 + $20,680)/$73.40 = 3,900

b.

Dollar sales to attain target profit = (Target profit + Fixed expenses) / CM ratio = ($265,580 + $6,460)/0.60 = $453,400

How many units would the company have to sell to attain the targ... The following is Addison Corporation's contribution format income statement for last month: Sales $1,393,800 Variable expenses 864,156 Contribution margin 529,644 Fixed expenses 165,000 Net operating income $ 364,644 The company has no beginning or ending inventories. A total of 20,200 units were produced and sold last month. How many units would the company have to sell to attain the target profit of $461,658? 29,607 39,400 23,900 26,900

How many units would the company have to sell to attain the targ...

The following is Addison Corporation's contribution format income statement for last month:

Sales	$1,393,800
Variable expenses	864,156
Contribution margin	529,644
Fixed expenses	165,000
Net operating income	$ 364,644

The company has no beginning or ending inventories. A total of 20,200 units were produced and sold last month.
How many units would the company have to sell to attain the target profit of $461,658?

	29,607
	39,400
	23,900
	26,900

 

Answer
23,900