What is the effect on the company income

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Question - The officers of Bradshaw Company are reviewing the profitability of the company's four products and the potential effect of several proposals for varying the product mix. An excerpt from the income statement and other data follow:

Particulars

Total

Product

P

Q

R

S

Sales

$ 62,600

$ 10,000

$ 18,000

$ 12,600

$ 22,000

Cost of goods sold

44,247

4,750

7,056

13,968

18,500

Gross profit

18,326

5,250

10,944

(1,368)

3,500

Operating expenses

12,012

1,990

2,976

2,826

4,220

Income before income taxes

6,314

3,260

7,968

(4,194)

(720)

Units sold


1,000

1,200

1,800

2,000

Sales price per unit


10.00

15.00

7.00

11.00

Per unit Variable cost of goods sold


2.50

3.00

6.50

6.00

Per unit Variable operating expenses per unit


1.17

1.25

1.00

1.20

1. What is the effect on the company's income if Product R is discontinued (increase/decrease in dollars)?

2. What is the effect on the company's income if the sales price of Product R is increased to $8 per unity with a decrease in the number o units sold to 1500 (increase/decrease in dollars)?

Reference no: EM131941095

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