1) Joseph Company has budgeted sales for the next three months as follows:
Budgeted Sales in Units
July
August
September
7,105 units
6,820 units
8,345 units
Past experience has shown that the ending inventory for each month should
be equal to 40% of the next month's expected sales in units. The company
is currently preparing a production budget.
Calculate the total number of units budgeted to be produced in July.
2) Foto Company manufactures and sells a product called JYMP. Results from
last year from the sale of JYMP appear below;
Sales revenue (8,000 JYMPs @ $120 each)
Variable costs
Contribution margin
Fixed costs:
$960,000
640,000
320,000
Salaries of line supervisors
Advertising expense
Allocated general overhead
Net loss
160,000
132,000
100,000
<72,000>
Foto Company is considering eliminating the JYMP product line. The
company has determined that if the JYMP product line is discontinued,
the contribution margin of its other products will increase by $120,000.
Calculate the amount by which the company's net income will increase if
the JYMP product line is dropped.