Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200...
Table 1: Pepita Disco Performance, 2011 (UYU in millions)
| Units sold | 100 million units |
| Revenue | 200 |
| Variable costs | |
| Materials | 30 |
| Direct labor(manufacturing,sales) | 40 |
| Opearational costs(manufacturing,inventory,delivery) | 30 |
| Other variable costs | 20 |
| Margin on Sales | 80 |
| Fixed Costs | |
| Marketing and advertising | 10 |
| Research and development | 10 |
| Other fixed costs(e.g head office) | 40 |
| Net margin | 20 |
1. What would be the absolute and percentage changes in net margin if Pepita Disco were to:
a. Reduce research and development 10%?
b. Reduce marketing and advertising 10%?
c. Reduce all fixed costs 10%?
Homework Answers
Solution :- Calculation of the absolute and percentage change in Net margin :-
a. Reduce research and development 10 %
New research and development Costs = $ 10 Million * 90% = $ 9 Million
b. Reduce marketing and advertising 10 %
New marketing and advertising Costs = $ 10 Million * 90% = $ 9 Million
c. Reduce all fixed cost 10 %
New Other Fixed Costs Costs = $ 40 Million * 90% = $ 36 Million
| Units sold | 100 million units |
| Revenue | 200 Million |
| Less : Variable Costs | |
| Material | ( 30 ) |
| Direct Labor | ( 40) |
| Operational Costs | ( 30 ) |
| Other variable costs | ( 20) |
| Contribution Margin | 80 |
| Less : Fixed Costs | |
| New Marketing & Advertisement Costs | ( 9 ) |
| New Research & Development Costs | ( 9 ) |
| New other Fixed Costs | ( 36 ) |
| Net Margin | 26 Million |
| Particulars | New | Old | Change |
| Net Margin (Absolute) | 26 Million | 20 Million | Increase 6 Million |
| Net Margin (Percentage) = Net Margin /Sales *100 | 26 /200*100 = 13 % | 20/200*100= 10% | Increase 3% |
Add Answer to:
Table 1: Pepita Disco Performance, 2011 (UYU in millions)
Units sold
100 million units
Revenue
200...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200 Variable costs Materials 30 Direct labor(manufacturing,sales) 40 Opearational costs(manufacturing,inventory,delivery) 30 Other variable costs 20 Margin on Sales 80 Fixed Costs Marketing and advertising 10 Research and development 10 Other fixed costs(e.g head office) 40 Net margin 20 a.) Reduce research and development 10% and, as a result, unit sales decreased 5%? b. Reduce marketing and advertising 10% and, as a result, unit sales decreased 5%?
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200 Variable costs Materials 30 Direct labor(manufacturing,sales) 40 Opearational costs(manufacturing,inventory,delivery) 30 Other variable costs 20 Margin on Sales 80 Fixed Costs Marketing and advertising 10 Research and development 10 Other fixed costs(e.g head office) 40 Net margin 20 a. Reduce variable costs per unit 10% and, as a result, unit sales decreased 10%?
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200 Variable costs Materials 30 Direct labor(manufacturing,sales) 40 Opearational costs(manufacturing,inventory,delivery) 30 Other variable costs 20 Margin on Sales 80 Fixed Costs Marketing and advertising 10 Research and development 10 Other fixed costs(e.g head office) 40 Net margin 20 Now, imagine a similar company, called Yuckles Pet Products, which sells more expensive products than Pepita Disco. It has exactly the same revenues, total fixed costs, and...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200 Variable costs Materials 30 Direct labor(manufacturing,sales) 40 Opearational costs(manufacturing,inventory,delivery) 30 Other variable costs 20 Margin on Sales 80 Fixed Costs Marketing and advertising 10 Research and development 10 Other fixed costs(e.g head office) 40 Net margin 20 Now, imagine a similar company, called Yuckles Pet Products, which sells more expensive products than Pepita Disco. It has exactly the same revenues, total fixed costs, and...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200...
Table 1: Pepita Disco Performance, 2011 (UYU in millions) Units sold 100 million units Revenue 200 Variable costs Materials 30 Direct labor(manufacturing,sales) 40 Opearational costs(manufacturing,inventory,delivery) 30 Other variable costs 20 Margin on Sales 80 Fixed Costs Marketing and advertising 10 Research and development 10 Other fixed costs(e.g head office) 40 Net margin 20 a. Reduce all variable costs 10%? b Get its salespeople to sell 10% more? c Raise its price 10%? g. Lower its price 10%?
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Question 1: Special order Sales volume in units 90 Revenue $6,300 Variable costs $900 Contribution margin $5,400 Fixed costs $1,600 Profit $18 Special order: A client wants to buy 10 units at a discounted price of $30 per unit. This is a one-time deal (l.e., a short-term decision). You have enough spare capacity to fulfill this special order without cutting back on your regular sales. a) Use the gross approach to decide whether you should take the special order: status...
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Question 1 If the number of units sold increases (quantity increases), which of the following will NOT change? Sales O Variable costs O Fixed costs Contribution margin Question 2 Kelly's Karts, LLC reported the following data: Sales quantity 1,000 units; Sales $750 per unit; Variable costs $405 per unit; Fixed costs $258,750. What is breakeven in sales dollars? $750,000 $395,000 $345,000 $562,500 Question 3 2 pt Kelly's Karts, LLC reported the following Contribution Margin Income Statement. What is the effect...
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The following information is available for year 1 for Pepper Products: Sales revenue (240,000 units)...
The following information is available for year 1 for Pepper
Products:
Sales revenue (240,000 units)
$
3,840,000
Manufacturing costs
Materials
$
226,000
Variable cash costs
192,000
Fixed cash costs
442,000
Depreciation (fixed)
1,348,000
Marketing and administrative costs
Marketing (variable, cash)
570,000
Marketing depreciation
202,000
Administrative (fixed, cash)
687,000
Administrative depreciation
101,000
Total costs
$
3,768,000
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All depreciation charges are fixed and are expected to remain the
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The following information is available for year 1 for Pepper Products: Sales revenue (210,000 units)...
The following information is available for year 1 for Pepper
Products:
Sales revenue (210,000 units)
$
3,150,000
Manufacturing costs
Materials
$
168,000
Variable cash costs
142,400
Fixed cash costs
327,600
Depreciation (fixed)
989,000
Marketing and administrative costs
Marketing (variable, cash)
422,400
Marketing depreciation
159,600
Administrative (fixed, cash)
509,200
Administrative depreciation
84,800
Total costs
$
2,803,000
Operating profits
$
347,000
All depreciation charges are fixed and are expected to remain the
same for year 2. Sales volume is expected...
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Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year. (1) Calculate the breakeven point in units and sales dollars. (2) Prepare a contribution margin income statement to...
The following information is available for year 1 for Pepper
Products:
Sales revenue (240,000 units)
$
3,840,000
Manufacturing costs
Materials
$
226,000
Variable cash costs
192,000
Fixed cash costs
442,000
Depreciation (fixed)
1,348,000
Marketing and administrative costs
Marketing (variable, cash)
570,000
Marketing depreciation
202,000
Administrative (fixed, cash)
687,000
Administrative depreciation
101,000
Total costs
$
3,768,000
Operating profits
$
72,000
All depreciation charges are fixed and are expected to remain the
same for year 2. Sales volume is expected...
The following information is available for year 1 for Pepper
Products:
Sales revenue (210,000 units)
$
3,150,000
Manufacturing costs
Materials
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Variable cash costs
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Fixed cash costs
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Depreciation (fixed)
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Marketing and administrative costs
Marketing (variable, cash)
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Marketing depreciation
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Administrative (fixed, cash)
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Administrative depreciation
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Total costs
$
2,803,000
Operating profits
$
347,000
All depreciation charges are fixed and are expected to remain the
same for year 2. Sales volume is expected...
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