QUESTION 1 1Washington& Brothers reports the following information for the month

Question

QUESTION 1 1Washington& Brothers reports the following information for the month of July Sales (5,000 units) Variable Costs s 325,000 210,000 115,000 Contribution Margin Fixed Costs Net Income (Loss) $ 40000 Management is considering the following as potential strategies to increase sales. A Increase fixed costs, $15,000 B. Increase variable cost to 70% of sales C. Increase sales price by 7.5% REQUIRED: What is the net income under any two strategies? Based on the two strateties you selected, which one do you recommend and why? ick Save and Submit to save and submit. Click Save All Answers to save all answers.

Explanation / Answer

As per policy, only one question is allowed to answer at a time, so answering question first :

Answer 1)

Implementation of Strategies: Strategy A Strategy B Strategy C Increase in FC Increase in VC Increase in SP sales (5000 units) 325000 325000 349375 less: Variable Costs 210000 227500 210000 Contribution Margin 115000 97500 139375 Less: Fixed Costs 90000 75000 75000 Net Income (Loss) 25000 22500 64375 Strategy C should be adopted to increae the Net Income.

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