Lewis Enterprises management has budgeted the following amounts for its next year.
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Total Fixed expenses
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$500,000
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Selling price per unit
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$1,000
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|
Variable expenses per unit
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$750
|
Requirements :
a. If Lewis Enterprises can reduce fixed expenses by 525,000, how will break even sales in units be affected?
b. If Lewis Enterprises spends an additional dollar 1,000on advertising, sales volumes should increase by 1,000 units. What effect will this have on operating Income?
c. If Lewis Enterprises can reduce fixed expenses by 540,000. by how much can variable expenses per unit increase and still allow the company to maintain the original breakdown sales in units?
d. If fixed expense increase by 25%, to maintain the original breakdown sales in units, what would be the selling price per unit have to be?