70.2K

Verified Solution

Link Copied!

Sheet Metal Furniture Company manufactures and distributes metal office furniture mostly to businesses.

With intense competion from surrounding distributors, Sheet Metal pays sales people commission on each sale.

Below is a breakdown of fixed and variable costs.

Required: a. Calculate break even point in dollars and sales for Sheet Metal.

b. If 18,000 pieces of furniture are sold this year, what will the net operating income for Sheet Metal Company be?

c. If commission is increased by $1 per unit sold and the result is 10% increase in unit sales, what will the new net operating income be?

d. Refer to the original data. If a $20,000 increase in advertising costs yields a 5% increase in unit sales, what will the new net operating income be?

e. Refer to #d. What is the new break even point in units and sales?

f. Of all the alternatives given, which is the best based on quantitative data only?

4. Sheet Metal Furniture Company manufactures and distributes metal office furniture mostly to businesses. With intense competion from surrounding distributors, Sheet Metal pays sales people commission on each sale. Below is a breakdown of fixed and variable costs. Per Unit Sales $50 Variable Expenses Production Commission $25$5$30 Fixed Costs Rent Advertising Salaries Other Total Fixed Costs \begin{tabular}{|r|} \hline$12,000 \\ $40,000 \\ \hline$148,000 \\ \hline$100,000 \\ \hline$300,000 \\ \hline \end{tabular}

Answer & Explanation Solved by verified expert

See Answer