Question

Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year (S000) |Last year (S000 Gross sales 25,421 24,224 Bad debt Nil ni Net sales 24,224 25,421 22,243 COGS 21,341 Contribution margin 3,178 12.5 2,883 11.9 2,067 816 2,122 SG&A Operating income 1.056 50 Other income and interest on long-term debt 60 Net income 766 996 What are your recommendations for the following situations? Do you have any concern? (a) if Polymerco's production is running at 84% capacity. (10 points) (b) if Polymerco's production is running at 100% capacity. (10 points)

Answer 1

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