User Account

All Pages

Determine the percentage decrease in company net income

Assignment Help Cost Accounting
Reference no: EM132561710

HNH Tech, Inc. is studying the addition of a new valve to its product line. The valve would be used by manufacturers of pneumatic equipment. The company anticipates starting with a relatively low sales volume and then boosting demand over the next several years. A new salesperson must be hired because

HNH Tech's current sales force is working at capacity. Two compensation plans are under consideration:

Plan A: An annual salary of Rs.33,000 plus a 10% commission based on gross dollar sales.

Plan B: An annual salary of Rs.99,000 and no commission.

HNH Tech, Inc. will purchase the valve for Rs.75 and sell it for Rs.120. Anticipated demand during the first year is 6,000 units. (In the following requirements, ignore income taxes.)

Required:

Question 1. Compute HNH Tech's break-even point for Plan A and Plan B.

Question 2. What is meant by the term operating leverage?

Question 3. Analyze the cost structures of both plans at the anticipated demand of 6,000 units. Which of the two plans is more highly leveraged? Why?

Question 4. Assume that a general economic downturn occurred during year 2, with product demand falling from 6,000 to 5,000 units. Determine the percentage decrease in company net income if HNH Tech had adopted Plan A.

Question 5. Repeat requirement (4) for Plan B. Compare Plan A and Plan B, and explain a major factor that underlies any resulting differences.

Question 6. Briefly discuss the likely profitability impact of an economic recession for highly automated manufacturers. What can you say about the risk associated with these firms?

Reference no: EM132561710

Questions Cloud

Describe how air from the environment gets : Describe how air from the environment gets to the alveoli in our lungs. In your description link the structures to their functions.
What are the differences between diploid dominant : What are the differences between diploid dominant, haploid dominant, and alternation of generations (when discussing life cycles
Shield financial- special assignment : How would you attempt to control the potential economic damage that may occur when switching from brokers to your own sales force?
How does meiosis increase genetic variation : How does meiosis increase genetic variation?
Determine the percentage decrease in company net income : Product demand falling from 6,000 to 5,000 units. Determine the percentage decrease in company net income if HNH Tech had adopted Plan A.
Discuss some of the main actors in microenvironment : Discuss some of the main actors in the microenvironment and the main forces in the macroenvironment for your organization.
Compute the unit manufacturing cost of portable and vip : Compute the unit manufacturing cost of Portable and VIP filing cabinets by using the company's current overhead costing procedures.
Is cytokinesis part of mitosis : Is cytokinesis part of mitosis? Does it take place in meiosis?
What are the differences between meiosis : What are the differences between meiosis I and meiosis II?

Reviews

Write a Review

Cost Accounting Questions & Answers

  Cost accounting assignment

Evaluate Method of measuring costs associated with production, budgeting process, normal job-order costing system , master budget, cycle time.

  Prepare the journal entries

Prepare the journal entries to record the bond issue and interest expense.

  Advise as to the liability of all the parties

Write a report on given case study and Advise as to the liability of ALL the parties both under common law and the Corporations Law.

  Prepare revenues budget

Prepare Revenues budget and Production budget in units

  Effect of exchange rate changes on cash and cash

Effect of exchange rate changes on cash and cash

  Corporate governance

You are to reflect on how this case of China Sky relates to what the arguments for and against allowing audit firm partners and/or employees to join audit committees.

  Cost-benefit analysis

A cost-benefit analysis of electronic medical records in primary care

  Non-annual interest rates and annuities

Theory of Interest- Non-annual interest rates and annuities

  Job costing in service organizations

How is job costing in service organizations different from job costing in manufacturing environments?

  Accounting for bad debt expense

Accounting for bad debt expense

  Accounting and partnership problems

Accounting and Partnership problems

  Development of relevant cash flows

Development of relevant cash flows - Cost estimating and financial analysis

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd