Hafiz muhammad usama javed

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<p>HAFIZ MUHAMMAD USAMA JAVED</p> <p>HAFIZ MUHAMMAD USAMA JAVEDBBA-13-01</p> <p>Some Application of CVP ConceptsPer UnitPercent of SaleSelling price $250100%Variable expenses15060%Contribution margin$10040%</p> <p>Change in Fixed Cost and Sales VolumeAcoustic concepts is currently selling 400 speakers per month at $250 per speaker. Total monthly sales is $100,000. The sales manager feels that a $10,000 increase in the monthly advertising budget would be increase increases in monthly sales by $30,000 to a total 520 units. Should the advertising budget be increased? The following table shows the financial impact of the proposed change in the monthly advertising.</p> <p>Current SaleSale with Additional Advertising BudgetDifferencePercent of SaleSales$100,000$130,000$30,000100%Variable Expenses60,00078,00018,00060%Contribution Margin 40,00052,00012,00040%Fixed Expenses 35,00045,00010,000Net Operating Income$5000$7000$2000</p> <p>Alternative solution 1Expected total contribution margin $130,000*40% CM ratio %52,000Present total contribution margin $100,000*40% CM ratio$40,000Incremental contribution margin 12,000Change in fixed expenses:Less incremental advertising expenses 10,000Increased net operating income </p> <p>Alternative solution 2Incremental contribution margin $30,000*40%$12,000Less incremental advertising expenses 10,000Increased net operating income$2000</p> <p>Change in Variable Costs and Sales VolumeExpected total contribution margin with higher-quality components:400units*$90 per unit/speaker$43,200Present total contribution margin: 400unit/speakers * $100 per unit/per speaker 40,000Increase in total contribution margin$3200</p> <p>Change Fixed Costs, Sales price,and Sales VolumeExpected total contribution margin with lower selling price:600speakers*$80 per speaker$48,000Present total contribution margin:400spekers*$100 per speaker40,000Incremental contribution margin 8000Change in fixed expenses:Less incremental advertising expenses15,000Reduction in net operating income$(7000)</p> <p>Present 400speakers per monthExpected 600 speakers per month</p> <p>Total Per unittotalPer unitDifference Sales$100,000$250$138,000$230$38,000Variable expenses60,00015090,00015030,000Contribution margin40,00010048,000808,000Fixed expenses35,00050,00015,000Net operating income(Loss)$5000$(2000)$(7,000)</p> <p>Change in Variable Costs, Fixed Costs, and Sales VolumeExpected Total contribution margin with sales staff on commissions: 460 speakers* $85 per speaker$39,100Present total contribution margin 400 speakers*$100 per speaker40,000Decreases in total contribution margin (900)Change in fixed expenses:Add salaries avoided if a commission is paid6,000Increases in net operating income$5100</p> <p>Present 400 speakers per monthExpected 460 speakers per month </p> <p>TotalPer unitTotal Per unit Difference Sale $100,000$250$115,000$250$15,000Variable expenses60,00015075,90016515,900Contribution margin40,000$10039,100$85900Fixed expenses35,00029,000(6,000)</p> <p>Net operating income $5,000$10,100$5,100</p> <p>Change in Selling priceVariable cost per speaker$150Desired profit per speaker $3,000/150 speakers20Quoted price per speaker$170</p>