Exercise-3 (Change in sales volume, sales price, variable and fixed costs)

By: Rashid Javed | Updated on: January 12th, 2017

Aladin company manufactures small battery that is used in clocks, toys and some other electronic devices. The last month’s income statement of Aladin is given below:

exercise-3-cvapr-img1

Required:

Prepare Aladin’s new income statement under each of the following conditions:

  1. The sales volume increases by 15%.
  2. The selling price decreases by 20% per unit, and the sales volume increases by 30%.
  3. The selling price increases by 50% per unit, fixed expenses increase by $20,000 and the sales volume decreases by 5%.
  4. Variable expenses increase by 20% per unit, the selling price increases by 12%, and the sales volume decreases by 10%.

Solution:

(1). Sales volume (number of units sold) increases by 15%:

exercise-3-cvapr-img2

(2). Selling price decreases by 10% and the sales volume increases by 30%:

exercise-3-cvapr-img3

(3). Selling price increases by 50%, fixed expenses increase by $20,000 and the sales volume decreases by 5%:

exercise-3-cvapr-img4

(4). Variable expenses increase by 20% per unit, the selling price increases by 12%, and the sales volume decreases by 10%.

exercise-3-cvapr-img5

A D V E R T I S E M E N T
One Comment on Exercise-3 (Change in sales volume, sales price, variable and fixed costs)
  1. Mike

    How do you compute the expected income?

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