Q1) Penury Company offers two products. Currently, the following represents usual results of month's operations:
| |
Product K |
Product L |
|
| |
|
Per |
|
Per |
Combined |
| |
Amount |
Unit |
Amount |
Unit |
Amount |
| Sales revenue..................... |
$120,000 |
$1.20 |
$80,000 |
$0.80 |
$200,000 |
| Variable expenses.............. |
60,000 |
0.60 |
60,000 |
0.60 |
120,000 |
| Contribution margin.......... |
$ 60,000 |
$0.60 |
$20,000 |
$0.20 |
80,000 |
| d expenses.................. |
|
|
|
|
50,000 |
| Net operating income........ |
|
|
|
|
$30,000 |
Using Excel, company is thinking of decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000, leaving unchanged selling price per unit, variable expense per unit, and total fixed expenses. Would you suggest adopting this plan?