Prepare income statement showing the changes

Assignment Help Accounting Basics
Reference no: EM133170534

Question - ABC Company is debating whether to purchase new equipment that would increase fixed costs from Nu 1, 90,000 to Nu 4, 30,000 and decrease variable costs from Nu14 per unit to Nu 8 per unit. If it were to implement the change at its current production level of 2, 50,000, profit would not change. Selling price is Nu 20 per unit and the total unit sold is 40,000.

Required -

a) Prepare income statement showing the changes to fixed and variable costs?

b) Calculate the degree of operating leverage for each situation and explain the change.

c) Comment on the net income position of the company if sales increased by Nu 20,000. Other variables remain unchanged.

Reference no: EM133170534

Questions Cloud

Construct a classification and regression tree : Consider the data in above Table. The target variable is salary. Start by discretizing salary as follows:
What potential risks may be present in this engagement : The company is contemplating a public offering to raise $1 million. What potential risks may be present in this engagement
Inadequate strategic management : Give an example of a firm or company that failed because of inadequate strategic management or a corporation that was forced to close during the pandemic.
Theories of discourse analysis : Discuss how the analysis of discourse is relevant to your field of study and career interests. How can you see yourself using the knowledge gained in the course
Prepare income statement showing the changes : Selling price is Nu 20 per unit and the total unit sold is 40,000. Prepare income statement showing the changes to fixed and variable costs
What is gibson labor hour efficiency : Gibson's Bodywork does automotive collision work. An insurance agency has determined that the standard time to replace a fender is 2.5 hours (i.e., "standa
Ahima data quality management model : Choose one of AHIMA's Data Quality Management Model's ten characteristics.
What is the concept of supply chain management : List in chronological order the five steps of the decision-making process as a component for conflict resolution.
Facilitate communication and collaboration : Some of the tools that we read about in the class allow collaborating among many locations. Most of these technologies like web conferencing, email, etc. can be

Reviews

Write a Review

Accounting Basics Questions & Answers

  The company expects to sell about 10 of its merchandise for

the company expects to sell about 10 of its merchandise for cash. of sales on account 70 are expected to be collected

  What entry does scale company make

Scale Company sells merchandise on account for $2,500 to Reata Company with credit terms of 3/10, n/60. What entry does Scale Company make

  How is the interest expense reported on CL Schedule K

CL LLC is a manufacturing business and reported taxable income of $40,000,000 before interest expense, How is the interest expense reported on CL Schedule K

  What is periodicity in accounting

What is periodicity in accounting?

  Amount in his or her capital account

After a partner decides to withdraw from a partnership, which of the following occurs when the withdrawing partner receives more cash than the amount in his or her capital account?

  Who might be affected by the terry decision

Acct 414 Project - The Terry Project: Adjusting the Financial Statements. Who might be affected by the Terry's decision to give in to the Board's demands and sell their proprietary machines to the university

  Briefly explain five weaknesses in the year-end inventory

Briefly explain FIVE (5) weaknesses in the year-end inventory count at Portmeirina Sdn Bhd which could lead to misstatement in the financial statements

  Prepare the journal entries to record the expenditure

Monty still feels the patent will be useful until the end of 2026. Prepare the journal entries to record the $24,800 expenditure and 2019 amortization

  Journalize the issuance of the common and preferred shares

In addition, Cheyenne issued 1,500 shares of $1 par value preferred stock for $4 per share. Journalize the issuance of the common and preferred shares

  A sporting goods store purchased 7600 of ski boots in

a sporting goods store purchased 7600 of ski boots in october. the store had 3600 of ski boots in inventory at the

  What is ending inventory using the average cost method

Maxim Corp. has provided the following information about one of its products: What is ending inventory using the average cost method

  What is the percentage change in sales

Assume the following sales data for a company: 2010: $750,000; 2011: $600,000. What is the percentage change in sales from 2010 to 2011

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd