Woodley Corporation management has budgeted the following amounts for its next fiscal year:

Requirements:
1. If Woodley Corporation can reduce fixed expenses by $20,000, how will break-even sales in units be affected?
2. If Woodley Corporation spends an additional $15,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income?
3. If Woodley Corporation can reduce fixed expenses by $50,000, by how much can variable expenses per unit increase and still allow the company to maintain the original break-even sales in units?
4. If fixed expenses increase by 20%, to maintain the original break-even sales in units, what would be the sale price per unit have to be?

Question

Woodley Corporation management has budgeted the following amounts for its next fiscal year:
  
Requirements:
1. If Woodley Corporation can reduce fixed expenses by $20,000, how will break-even sales in units be affected?
2. If Woodley Corporation spends an additional $15,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income?
3. If Woodley Corporation can reduce fixed expenses by $50,000, by how much can variable expenses per unit increase and still allow the company to maintain the original break-even sales in units?
4. If fixed expenses increase by 20%, to maintain the original break-even sales in units, what would be the sale price per unit have to be?

Quizplus · Accepted Answer

The Answer of Woodley Corporation management has budgeted the following amounts for its next fiscal year:
  
Requirements:
1. If Woodley Corporation can reduce fixed expenses by $20,000, how will break-even sales in units be affected?
2. If Woodley Corporation spends an additional $15,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income?
3. If Woodley Corporation can reduce fixed expenses by $50,000, by how much can variable expenses per unit increase and still allow the company to maintain the original break-even sales in units?
4. If fixed expenses increase by 20%, to maintain the original break-even sales in units, what would be the sale price per unit have to be?

Woodley Corporation Management Has Budgeted the Following Amounts for Its