Penury company offers two products at present the following

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Penury Company offers two products. At present, the following represents the usual results of a month's operations:

 

Product K

Product L

 

 

 

Per

 

Per

Combined

 

Amount

Unit

Amount

Unit

Amount

Sales revenue.....................

$120,000

$1.20

$80,000

$0.80

$200,000

Variable expenses..............

 60,000

0.60

60,000

0.60

120,000

Contribution margin..........

$  60,000

$0.60

$20,000

$0.20

80,000

d expenses..................

 

 

 

 

50,000

Net operating income........

 

 

 

 

$30,000

Using Excel, The company is considering decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000, leaving unchanged the selling price per unit, variable expense per unit, and total fixed expenses. Would you advise adopting this plan?

Reference no: EM13355886

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