Reference no: EM132556888

Raub Company has prepared its projected 1991 income statement, which is presented below. The company is evaluating four independent situations and has asked for your assistance.

Sales (10,000 units) $153,600

Expenses - fixed $53760

Variable $88,320

$142,080

Net income $ 11,520

Required.

Question A. Income statement using marginal costing.

Question B. If a new marketing method would increase variable expenses (by unknown amount that you are to determine), increase sales units 10%, decrease fixed costs 5%, and increase net income by 25%, what would be the company, break-even point in terms of dollar sales if it adopts this new method? Assume that the sales price per unit would not be changed.

Question C. If sales units increase 30% in the next year and the net income increases 150%, did the manager perform better or worse than expected in terms of net income? Assume that there was adequate capacity to meet the increased volume without increasing fixed costs.

Question D. Assume variable costs would increase 10% per unit due to a change in the quantity of direct materials, and sales would decrease 5% in spite of increasing advertising costs of $5,000. Should the company make the change in the materials used in production?

Question E. If the company hires an additional salesperson at a salary of $10,200,how much must the sales increase in terms of dollars to maintain the company's current income?