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Required information (The following information applies to the questions displayed below. Monterey Co. makes and sells a single product. The current selling price is $16 per unit. Variable expenses are $9.6 per unit, and fixed expenses total $32,240 per month. (Unless otherwise stated, consider each requirement separately.) Required: a. Calculate the breakeven point expressed in terms of total sales dollars and sales volume. (Do not round intermediate calculations.) Breakeven sales Breakeven volume units ! Required information [The following information applies to the questions displayed below.] Monterey Co. makes and sells a single product. The current selling price is $16 per unit. Variable expenses are $9.6 per unit, and fixed expenses total $32,240 per month. (Unless otherwise stated, consider each requirement separately.) b. Calculate the margin of safety and the margin of safety ratio. Assume current sales are $96,600. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.) Margin of safety Margin of safety of ratio % Required information [The following information applies to the questions displayed below.] Monterey Co. makes and sells a single product. The current selling price is $16 per unit. Variable expenses are $9.6 per unit, and fixed expenses total $32,240 per month. (Unless otherwise stated, consider each requirement separately.) c. Calculate the monthly operating income (or loss) at a sales volume of 5,350 units per month. (Do not round intermediate calculations.) Required information (The following information applies to the questions displayed below.) Monterey Co. makes and sells a single product. The current selling price is $16 per unit. Variable expenses are $9.6 per unit, and fixed expenses total $32,240 per month. (Unless otherwise stated, consider each requirement separately.) d. Calculate monthly operating income (or loss) if a $2 per unit reduction in selling price results in a volume increase to 8,250 units per month. (Do not round intermediate calculations.) Required information [The following information applies to the questions displayed below.) Monterey Co. makes and sells a single product. The current selling price is $16 per unit. Variable expenses are $9.6 per unit, and fixed expenses total $32,240 per month. (Unless otherwise stated, consider each requirement separately.) e. What questions would have to be answered about the cost-volume-profit analysis simplifying assumptions before adopting the price cut strategy of part d? (Select all that apply.) Check All That Apply Does the increase in volume move fixed expenses into a new relevant range? O Does the increase in volume move variable expenses into a new relevant range? Are variable expenses really linear? Are fixed expenses really linear? ! Required information [The following information applies to the questions displayed below.] Monterey Co. makes and sells a single product. The current selling price is $16 per unit. Variable expenses are $9.6 per unit, and fixed expenses total $32,240 per month. (Unless otherwise stated, consider each requirement separately.) f-1. Calculate the monthly operating income (or loss) that would result from a $1 per unit price increase and a $6,000 per month increase in advertising expenses, both relative to the original data. Assume a sales volume of 5,350 units per month. (Do not round intermediate calculations.) f-2. Is the increase in advertising expense justified by the price increase? O Yes O No Required information (The following information applies to the questions displayed below.) Monterey Co. makes and sells a single product. The current selling price is $16 per unit. Variable expenses are $9.6 per unit, and fixed expenses total $32,240 per month. (Unless otherwise stated, consider each requirement separately.) Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a salary of $2,500 per month. 9-1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.8 per unit, assuming a sales volume of 5,350 units per month. (Do not round intermediate calculations.) g-2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.8 per unit, assuming a sales volume of 6,300 units per month. (Do not round intermediate calculations. Losses should be indicated by a minus sign.) h-1. Assuming that the sales volume of 6,300 units per month achieved in part g could also be achieved by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss? (Do not round intermediate calculations. Losses should be indicated by a minus sign.) h-2. Which strategy would you recommend? O Plan to increase advertising expenses. O Plan to change the sales force compensation

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