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Naifation
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Posted: 30 Apr 2011 at 16:38 \| IP Logged

Sales 6000 units

SP $12

VC $54.000

FC $21.000

If the manager beileve that increase $4.000 in Ads Expenses will make the sales increase by $30.000. What is the net proft?

Could any one answer this question?

Celyn
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Posted: 01 May 2011 at 12:22 \| IP Logged

I think it's $23,000:

[($12 X 6,000) + $30,000] - ($54,000 + $21,000 + $4,000) =
Net Profit

$102,000 - $79,000 = $23,000 Net Profit

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Naifation
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Posted: 01 May 2011 at 17:53 \| IP Logged

but the answer in the book give MCQ of 500 gain as the correct choise and I dont have the explnatoin for it

Celyn
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Posted: 01 May 2011 at 18:14 \| IP Logged

Ohhh, I got it! Sorry, I just added the variable costs,
but didn't modify it for the increased activity. So:

VC = $54,000 for 6,000 units

$54,000/6,000 = $9/unit VC

New Sales = $30,000/$12 = 2,500

New Units = 6,000 + 2,500 = 8,500 units

So: ($12 X 8,500) - [($9 X 8,500) + $21,000 + $4,000] = X

$102,000 - $101,500 = $500

Sorry, if I confused you. Looks like my BEC knowledge
didn't stick around long!

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Naifation
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Posted: 02 May 2011 at 04:48 \| IP Logged

thank you ve

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