The contribution income statement would require a firm to ___________.
1 answer:
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Answer:
Net income will increase by $11,250
Explanation:
Provided information,
Current sales = 75,000 units which represents 80% capacity
Therefore, 100% capacity =
Fixed cost at 100% capacity = $1.25 93,750 = $117,187.50
Therefore,
Current net income
Sales = 75,000 $7.00 = $525,000
Less: Variable cost = 75,000 $3.50 = $262,500
Less: Fixed Cost = $117,187.50
Net Operating Income = $145,312.50
Now with the additional order, which is of 15,000 units the additional ideal capacity of 20% will be utilized, further no fixed cost will be incurred, as the entire fixed cost for 100% capacity is utilized, thus
Sales = 15,000 $3 = $45,000
Less: Variable cost = 15,000 $2.25 = $33,750
Net Income = $11,250
Thus, the net income will increase by $11,250
Answer:
both
- United Continental with a capital expenditure of 60.68%
- Southwest Airlines with a capital expenditure of 51.38%
Explanation:
Since United Continental's purchases of Boeing planes represent over 60% of their capital expenditures, this means that Boeing had to be the primary plane supplier. Even if the company purchased planes form other manufacturer, their purchases would not even be 40% of the company's purchases.
The same applies to Southwest Airlines, even though the purchases from Boeing are a little lower, they are still over 51%. This means the company could not have spent more money on purchasing planes from another company. The maximum purchase from another airplane manufacturer would have been less than 49% at most.
Besides the previous analysis, you must also consider that the company spends money on things besides airplanes, e.g. new training facilities, equipment, computer software, other vehicles, etc.
