Data concerning A Corporation's single product appear below:

Per Unit Percent of Sales
Selling price $ 160 100%
Variable expenses 48 30%
Contribution margin $ 112 70%
Fixed expenses are $1,054,000 per month. The company is currently selling 9,800 units per month.
The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $8 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $100,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 500 units.
What should be the overall effect on the company's monthly net operating income of this change?

Answer:

Effect on income= $73,600 increase

Explanation:

Giving the following information:

Contribution margin $ 112

Increase in variable cost= $8 per unit.

Decrease in fixed costs= $100,000 per month.

Increase in sales unit= 500 units

To calculate the effect on income, we need to use the following formula:

Effect on income= effect on total contribution margin + decrease in fixed costs

Effect on income= 500*104 - 9,800*8 + 100,000

Effect on income= $73,600 increase

Which of the following is a disadvantage of a strategic alliance?
A. Firms that enter into a strategic alliance with a foreign firm tend to face higher trade barriers.
B. Entering into a strategic alliance makes it difficult for a firm to enter into a foreign market.
C. As a result of strategic alliance, fixed costs of developing new products tend to increase.
D. Strategic alliance always leads to a loss to either of the firms involved.
E. Strategic alliance gives competitors a low-cost route to new technology and markets

A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 19,000 defective units that cost $5.40 per unit to manufacture. The units can be a) sold as is for $3.40 each, or b) reworked for $4.80 each and then sold for the full price of $8.80 each. What is the incremental income from selling the units as scrap and reworking and selling the units?
Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.)

1. The oversupply of hospitals and in-patient beds in the U.S. produced by the Hill-Burton legislation is the result of: A. The advent of managed care B. Change in the focus of medical education C. Technological advances D. Clinical guidelines E. A and C