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Q1) Penury Company offers two products. Currently, the following represents usual results of 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
d expenses..................         50,000
Net operating income........         $30,000

Using Excel, company is thinking of decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000, leaving unchanged selling price per unit, variable expense per unit, and total fixed expenses. Would you suggest adopting this plan?

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