Sun Inc.sells a single product.The company's 2012 income statement is given below.
Sales (4,000 units) $800,000
Less flexible (variable)expenses $200,000
Less capacity-related (fixed)expenses $300,000
In an attempt to improve performance,Jo,the manager is considering a number of alternative actions.Each situation is to be evaluated separately.
Required:
a. Calculate operating income and the break-even point in units and dollars for 2012
b. Jo believes that a $100,000 increase in equipment improvements will increase sales considerably.How much must sales increase to justify this capital expenditure?
c. Jo believes that flexible costs can be decreased by 10%.As a result,she wants to reduce the selling price by 2% in anticipation of a 5% increase in sales.What are projected profits if these proposals are implemented?

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The Answer of Sun Inc.sells a single product.The company's 2012 income statement is given below.
Sales (4,000 units) $800,000
Less flexible (variable)expenses $200,000
Less capacity-related (fixed)expenses $300,000
In an attempt to improve performance,Jo,the manager is considering a number of alternative actions.Each situation is to be evaluated separately.
Required:
a. Calculate operating income and the break-even point in units and dollars for 2012
b. Jo believes that a $100,000 increase in equipment improvements will increase sales considerably.How much must sales increase to justify this capital expenditure?
c. Jo believes that flexible costs can be decreased by 10%.As a result,she wants to reduce the selling price by 2% in anticipation of a 5% increase in sales.What are projected profits if these proposals are implemented?

Sun IncSells a Single Product