10 May WHAT WOULD BE THE EXCEPTED PROFIT (OR LOSS) AS A RESULT OF THIS ACTION?
Product Pricing: Single ProductPresented is the 2017 contribution income statement of Grafton Products.GRAFTON PRODUCTSContribution Income StatementFor Year Ended December 31 2017Sales (13 000 units) $ 2 925 000Less variable costs Cost of goods sold$ 780 000Selling and administrative 208 000 (988 000)Contribution margin 1 937 000Less fixed costs Manufacturing overhead 780 000Selling and administrative 315 000 (1 095 000)Net income $ 842 000During the coming year Grafton expects an increase in variable manufacturing costs of $12 per unit and in fixed manufacturing costs of $39 000.(a) If sales for 2018 remain at 13 000 units what price should Grafton charge to obtain the same profit as last year? Round to the nearest cent.$Answer(b) Management believes that sales can be increased to 16 000 units if the selling price is lowered to $200. What would be the excepted profit (or loss) as a result of this action? Use a negative sign with your answer if appropriate. Answer(c) After considering the expected increases in costs what sales volume is needed to earn a profit of $254 800 with a unit selling price of $200? Round to the nearest unit.
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