Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Data: Alpine, Inc., has been experiencing losses for some time, as shown by its most recent income statement:

866_Income statement.jpg

All variable expenses in the company differ in terms of units sold, except for sales commissions, which are based on sales dollars. Variable manufacturing overhead is 50 cents per unit. The company’s plant has a capacity of 70,000 units.

Management is specifically disappointed with 2011’s operating results. Some possible courses of action are being studied to find out what should be done to make 2012 profitable.

REQUIRED:

1) Redo Alpine, Inc.’s 2011 Income Statement in the contribution format. Show both a total column and a per unit column on your statement.

2) In an effort to make 2012 profitable, Micah Patdu, the president is considering two proposals prepared by members of her staff:

a) Jon Michael, the sales manager would like to decrease the unit selling price by 25 %. He is certain that this would fill the plant to capacity.

b) Mary Wilkinson, the executive vice president would like to raise the unit selling price by 25 %, increase the sales commissions to 12 % of sales, and increase advertising by $90,000. Based on experience in another company, she is confident this would trigger a 50 % increase in unit sales.

Make two contribution income statements, one showing what profits would be under Jon Michael’s proposal and one showing what profits would be under Mary Wilkinson’s proposal. On each statement, comprise both total and per unit columns (don’t show per unit data for fixed costs)

3) Refer to the original data. Micah Patdu, the president thinks it would be unwise to change the selling price. Rather, she wants to use less costly materials in manufacturing units of product, thus reducing costs by $1.73 per unit. How many units would have to be sold during 2012 to earn a target profit of $59,000 for the year?

4) Refer to the original data. Alpine, Inc.’s advertising agency thinks that the problem lies in insufficient promotion. By how much can advertising be increased and still allow the company to earn a target return of 4.5 % on sales of 60,000 units?

5) Refer to the original data. Suppose that the company was approached by an overseas distributor who wanted to purchase 15,000 units on a special price basis during June 2011. There would be no sales commission on these units. Though, shipping costs would increase by 80 % per unit, and variable administrative costs would be decreased by 50 % per unit on these “special order” units. In addition, Alpine, Inc., would have to pay a foreign import duty of $3,150 on behalf of the overseas distributor in order to get the goods into the country. Given these data, what unit price would have to be quoted on the 15,000 units by Alpine,

Inc., to permit the company to earn an ‘overall’ profit of $18,000 for the year ended June 30, 2011 on total operations? Regular business would not be disturbed by this special order. 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92023

Have any Question? 


Related Questions in Accounting Basics

Assessment item - review of current accounting issuestaskin

Assessment item - Review of Current Accounting Issues Task In your accounting career you will be required to analyse current accounting issues and communicate your theoretical understanding to your professional colleague ...

Practice questionsfarmer george tractors ltd has

Practice questions: Farmer George Tractors Ltd has £500,000 to invest. The net cash flows of two possible projects are as follows: Year Project 1 Project 2   £ £ 1 80,000 90,000 2 100,000 110,000 3 180,000 190,000 4 140, ...

Common-size balance sheet of michael hill international ltd

Common-size Balance Sheet of Michael Hill International Ltd for the years 2014 and 2015: Particulars 2015   $000 % of total 2014    $000 % of total ASSETS         Current assets         Cash and cash equivalents 6797 1.9 ...

Changes in accounting principles and changes in accounting

"Changes in Accounting Principles and Changes in Accounting Estimates" Please respond to the following: • From the e-Activity, discuss the accounting principles that the identified company changed, and explain the major ...

I need help with a t-chart account with the following1

I need help with a T-Chart Account with the following: 1. Received $10,000 contribution from Bill London, owner, in exchange for capital. 2. Paid utilities expense of $400. 3. Paid the liability from July 5 (Purchased eq ...

Read the pcaob enforcement case against christopher e

Read the PCAOB enforcement case against Christopher E. Anderson (PCAOB Release No. 105-2008-003, available at www.pcaob.org). Among the PCAOB's findings is that the audit partner, Anderson, changed materiality during the ...

1 tonys pizza has total sales of 786611 and costs of 524268

1. Tony's Pizza has total sales of $786,611 and costs of $524,268. Depreciation is $38,470 and the tax rate is 31 percent. The firm does not have any interest expense. What is the operating cash flow? 2. A company purcha ...

Accounting exercise1 your business sold 6000 in services

Accounting Exercise 1. Your business sold $6,000 in services this month. Your one employee who provided some of the service was paid $12.00 per hour and worked 80 hours during the month pius 7.62%Wpri Taxes. "Them were n ...

Printing and distribution of invoices does not constitute

Printing and distribution of invoices does not constitute an increase in economic resources. On the other hand, can you give examples of what should be included in REA diagram? Remember that REA specifies the domain rule ...

Question case study essay on martin shkreli fraud casecase

Question: Case Study Essay on Martin Shkreli Fraud Case. Case Study Criteria: Financial reporting and prevention of fraud through the application of significant internal policies and adherence to corporate governance ele ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate