Knowee
Questions
Features
Study Tools

Smart Products has the following information available for the month of March:  Sales (4,000 units)$40,000  Variable costs$18,000  Fixed costs$ 5,324  Net income$16,676The company's manager is considering several options to increase net income. If variable costs per unit are decreased by 15 cents and fixed costs are decreased to $5,000, what will net income increase to?Question 2Select one:a.$17,600b.$17,000c.$17,276d.$55,575e.None of these is correct

Question

Smart Products has the following information available for the month of March:  Sales (4,000 units)40,000 Variablecosts40,000  Variable costs18,000  Fixed costs5,324 Netincome 5,324  Net income16,676The company's manager is considering several options to increase net income. If variable costs per unit are decreased by 15 cents and fixed costs are decreased to 5,000,whatwillnetincomeincreaseto?Question2Selectone:a.5,000, what will net income increase to?Question 2Select one:a.17,600b.17,000c.17,000c.17,276d.$55,575e.None of these is correct

...expand
🧐 Not the exact question you are looking for?Go ask a question

Solution

First, let's calculate the variable cost per unit:

Variable costs = $18,000 Number of units = 4,000

Variable cost per unit = Variable costs / Number of units = 18,000/4,000=18,000 / 4,000 = 4.5 per unit

The manager is considering decreasing this by 15 cents, so the new variable cost per unit would be $4.35.

Next, let's calculate the total variable costs after the decrease:

Total variable costs = Variable cost per unit * Number of units = 4.354,000=4.35 * 4,000 = 17,400

The fixed costs are also being decreased to $5,000. So, the total costs (variable + fixed) would be:

Total costs = Total variable costs + Fixed costs = 17,400+17,400 + 5,000 = $22,400

The sales remain the same at $40,000. So, the new net income would be:

Net income = Sales - Total costs = 40,00040,000 - 22,400 = $17,600

So, the answer is a. $17,600.

This problem has been solved

Similar Questions

Jazz Products has the following information available for the month of March:  Sales (4,000 units)$40,000  Variable costs18,000  Fixed costs  5,000  Net income$17,000The company's manager is considering several options to increase net income. By what amount do sales dollars need to increase in order for net income to increase to $25,000?Question 3Select one:a.$14,545b.$25,000c.$ 3,000d.$18,820

This is a company's current budget:Selling price 20Volume           40,000Variable cost per unit                  12Fixed costs          200,000Operating income          120,000Income tax rate 30%Net income           84,000What selling price would generate the company a "Net Income" of $150,000?[You must round up your answer to the nearest whole dollar, and do not enter dollar signs ($) or comma's]

Fill in the Blank QuestionFill in the blank question.A company sells 800 units at $16 each, has variable costs of $12 per unit, and fixed costs of $1,200. Income is $.

Multiple Choice QuestionA manufacturing company currently produces 1,000 units of a product at a cost of $5,000. The units sell for $7,000. Alternatively, the company can process the units further to produce a refined product that will sell for $10,000. The additional processing will cost $4,000. The company should:Multiple choice question.process further because net incremental income will be $1,000process further because net incremental income will be $6,000sell as is because the incremental income of selling as is versus processing further will increase income by $1,000sell as is because processing further will reduce income by $6,000

If production increases by 20%, total variable cost will:Group of answer choicesdecrease by 20%.increase by 20%.increase by more than 20%.remain the same.

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.