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Accounting

  • March 5, 2022
  • Posted by: Phillip Author
  • Category: Uncategorized
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1 Crane Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as follows.

Output
in Units		 Rent
Cost		 Direct
Materials
1,000 $5,660 $4,500
2,000 5,660 6,900
3,000 9,056 6,900
4,000 9,056 9,200
5,000 9,056 11,500
6,000 9,056 13,800
7,000 9,056 16,100
8,000 9,056 18,400
9,000 11,320 33,168
10,000 11,320 39,620
11,000 11,320 49,808

(b)

Determine the relevant range of activity for this product based on the cost behavior of each input.

The relevant range of activity for this product select the relevant range                                   units.

2 Sunland Company reports the following operating results for the month of August: sales $432,000 (4,800 units), variable costs $258,000, and fixed costs $95,000. Management is considering the following independent courses of action to increase net income.

1. Increase the unit selling price by 10% with no change in total variable costs, fixed costs, or units sold.
2. Reduce variable costs to 64% of sales while holding fixed costs, quantity, and unit selling price constant.

Compute the net income to be earned under each alternative.

1. Net income $enter a dollar amount 
2. Net income $enter a dollar amount 

Which course of action will produce the higher net income? select an alternative