Reference no: EM132831697
Question - Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Presently, the company sell 90,000 units for $70 per unit. The variable production costs are $35, and fixed costs amount to $1,500,000. Production engineers have advised management that they expect labor costs to rise by 20% and unit material costs to rise by 5% in the coming year. Of the $35 variable costs, 60% are from labor and 15% are from materials. Variable overhead costs are expected to increase by 25%. Sales prices cannot increase more than 10%. It is also expected that fixed costs will rise by 4% as a result of increased taxes and other miscellaneous fixed charges.
The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 5% during the year.
Required -
a. Compute the volume in units and the dollar sales level necessary to maintain the present profit level, assuming the maximum price increase is implemented.
b. Compute the volume of sales and the dollar sales level necessary to provide 5% increase in profits, assuming that the maximum price increase is implemented.
c. If the volume of sales were to remain at 90,000 units, what price change would be required to attain the 5% price increase in profits? Calculate the new price.
|
HRM 201 Introduction to Human Resource management Assignment
: HRM 201 Introduction to Human Resource management Assignment Help and Solution, Emirates College of Technology - Assessment Writing Service
|
|
What amount will appear as budgeted total sales revenue
: Hanson expects sales in each quarter of 2014 to be 10% more than the respective quarter of 2013. What amount will appear as budgeted total sales revenue
|
|
Do mental disorders influence criminal behavior
: Do mental disorders influence criminal behavior? Many believe they do, but others see them as an excuse.
|
|
Justifying the value of proposed target segment
: As the Uber case reveals, the company's primary challenges are associated with gaining competitive advantage in mainland China
|
|
Compute the volume of sales and the dollar sales level
: Compute the volume of sales and the dollar sales level necessary to provide 5% increase in profits, assuming that the maximum price increase is implemented
|
|
What are the effects on cash flow
: A project currently generates sales of $5 million, variable costs equal 50% of sales, and fixed costs are $1.0 million. What are the effects on cash flow
|
|
Examine one foreign country of interest
: Provide details as to where the country was at least 25 years ago, in regards to innovation, and compare to where the country is today, in regards to innovation
|
|
Determine the role of corporate codes of conduct
: -Recommend ideas you have for dealing with these issues. -Determine the role of corporate codes of conduct in dealing with these concerns.
|
|
How much is the net increase in the shareholders equity
: Authorized Share capital is 500,000 shares at $10 par per share. How much is the net increase in the Shareholders' Equity of the above transactions
|