Lewis Enterprises management has budgeted the following amounts for its next fiscal year:
Requirements:
a. If Lewis Enterprises can reduce fixed expenses by $25,000, how will breakeven sales in units be affected?
b. If Lewis Enterprises spends an additional $1,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income?
c. If Lewis Enterprises can reduce fixed expenses by $40,000, by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?
d. If fixed expenses increase by 25%, to maintain the original breakeven sales in units, what would be the selling price per unit have to be?

Question

Lewis Enterprises management has budgeted the following amounts for its next fiscal year:
  Requirements:
a. If Lewis Enterprises can reduce fixed expenses by $25,000, how will breakeven sales in units be affected?
b. If Lewis Enterprises spends an additional $1,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income?
c. If Lewis Enterprises can reduce fixed expenses by $40,000, by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?
d. If fixed expenses increase by 25%, to maintain the original breakeven sales in units, what would be the selling price per unit have to be?

Quizplus · Accepted Answer

The Answer of Lewis Enterprises management has budgeted the following amounts for its next fiscal year:
  Requirements:
a. If Lewis Enterprises can reduce fixed expenses by $25,000, how will breakeven sales in units be affected?
b. If Lewis Enterprises spends an additional $1,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income?
c. If Lewis Enterprises can reduce fixed expenses by $40,000, by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?
d. If fixed expenses increase by 25%, to maintain the original breakeven sales in units, what would be the selling price per unit have to be?

Lewis Enterprises Management Has Budgeted the Following Amounts for Its