Almo company manufactures and sells adjustable canopies

Assignment Help Accounting Basics

Reference no: EM13589021

Almo company manufactures and sells adjustable canopies that attach to motor homes and trailers. Almo developed its budget for the current year assuming that the canopies would sell at a price of $500 each. The variable expenses for each canopy were forecasted to be $300 and the annual fixed expenses were forecasted to be $210,000. Almo had targeted a profit of $510,000.

While Almo's sales usually rise during the second quarter, the May financial statements reported that sales were not meeting expectations. For the first five months of the year, only 460 units had been sold at the established price, with variable expense as planned, and it was clear that the target profit for the year would not be reached unless some actions were taken. Almo's president assigned a management committee to analyze the situation and develop several alternative courses of action. The following three alternatives were presented to the president, only one of which can be selected.

1.	Reduce the selling price by $40. The marketing department forecasts that with the lower price, 3,800 units could be sold during the remainder of the year.
2.	Lower variable expenses per unit by $30 through the use of less expensive materials. Because of the difference in materials, the selling price would have to be lowered by $35 and sales of 3,300 units for the remainder of the year are forecast.
3.	Cut fixed expenses by $15,000 and lower the selling price by 10 percent. Sales of 3,100 units would be expected for the remainder of the year.

Required:

a.	If no changes are made to the selling price or cost structure, estimate the number of units that must be sold during the year to break even.

Number of units

units

b.	If no changes are made to the selling price or cost structure, estimate the number of units that must be sold during the year to attain the target profit of $510,000.

Number of units

units

Determine which of the alternatives Almo's president should select to maximize profit.

	Alternative 2
	Alternative 1
	Alternative 3

Reference no: EM13589021

Questions Cloud

Calculate the percentage or fraction of geologic time that : 1. the length of recorded history for humankind is about 5000 years.nbsp clearly most people view this span as being

The lase requires four equal payments of 175000 with the : bird leasing inc. leased equipment to george corporation on jan 1 2013. the terms of the lease are as follows. the lase

A charging bull elephant with a mass of 5500 kg comes : question a charging bull elephant with a mass of 5500 kg comes directly toward you with a speed of 4.20 ms. you toss a

Your organization is in the software industry and creates a : your organization is in the software industry and creates a software product for library textbooks and assets which is

Almo company manufactures and sells adjustable canopies : almo company manufactures and sells adjustable canopies that attach to motor homes and trailers. almo developed its

If the duration of shock was 01 second which was the force : question an egg mass of 40 g is on a table of i meter high it falls and breaks. if the collision with the ground is

The company sold 34000 units in the east region and 13000 : diego company manufactures one product that is sold for 80 per unit in two geographic regions-the east and west

Let qcx x2 c prove that if c lt 14 there is a unique mu : 1. let qcx x2 c. prove that if c lt 14 there is a unique mu gt 1 such that qc is topologically conjugate to fmux

Carr company produces a single product during the past year : carr company produces a single product. during the past year carr manufactured 30420 units and sold 24900 units.

User Account

All Pages