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Joe Vandal LLC. last year’s sales were $10million. The company spends $3.5 million for purchase of...

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Accounting

Joe Vandal LLC. last year’s sales were $10million. The companyspends $3.5 million for purchase of direct materials and $2.5million for direct labor. Overhead is $3.5 million, and profit is$500,000. Direct labor and direct material vary directly withsales, but overhead does not. The company wants todouble its profit.

  1. By how much should the firm increase annual sales?
  2. By how much should the firm decrease material costs?
  3. By how much should the firm decrease labor cost?

Please shown your answer with clearly laid-out table format withnumbers labeled.

Answer & Explanation Solved by verified expert
4.0 Ratings (587 Votes)
1 Computation of increase in sales require Contribution Margin RatiosalesVariable costSales 10 million 35 Million250 Million10 Million40 Contribution require Fixed Cost expected Profit 350 Million1 Million450    See Answer
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