Evaluate the profitability of the course of action

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Reference no: EM132853762

CHANGE IN INCOME -Marvel

Marvel Company sells Wolverine costumes for $150 per unit.
Variable costs to make and sell the product are $70 per unit.
Fixed costs are $40 per unit at a normal volume of 10,000 units per year.
Sales volume recently has been equal to normal volume and is expected to continue at that level.
Current net income: $400,000

Evaluate the profitability of the following course of action open to management. Compare with the present situation. Show change in net income.

A plan is proposed to improve costume design and thus increase sales volume. The proposal would increase variable production costs by $7 per unit on all units manufactured and fixed costs by $180,000 per year.

Sales volume in units would be increased by 40% annually with no change in selling price.
Net income will increase (decrease)...

Reference no: EM132853762

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