Q1) Penury Company offers two products. At present, the following represents the usual results of a 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
|
|
Fixed expenses..................
|
|
|
|
|
50,000
|
|
Net operating income........
|
|
|
|
|
$ 30,000
|
Company is considering decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000, leaving untailored selling price per unit, variable expense per unit, and total fixed expenses. Would you suggest adopting this plan?