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Q1) 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

Fixed expenses..................

 

 

 

 

    50,000

Net operating income........

 

 

 

 

$  30,000

Company is considering decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000, leaving untailored selling price per unit, variable expense per unit, and total fixed expenses. Would you suggest adopting this plan?

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