Wing Company makes a special kind of racing tire
Variable costs are $320, and fixed costs are $35,500 per month. Wing sells 600 units per month at a sales price of $410. If Wing upgrades the quality of the tire, management believes that the sales price can be increased to $470. If so, the variable cost will increase to $350, and the fixed costs will rise by 30%. The CEO wishes to increase his operating income by 21%. If the company decides to upgrade the product, the CEO will reach his goal.
Indicate whether the statement is true or false
FALSE .Upgrade Do Not Upgrade
Sales Revenue $282,000 $246,000
Variable costs 210,000 192,000
Fixed costs 46,150 35,500
Operating income $25,850 $18,500
Increase in operating income [(25,850 -18,500 ) / 18,500] x 100 = 39.7%
You might also like to view...
Although all of the following apply, which one is the primary purpose for establishing professional codes of ethics and standards of performance?
A. Protect the clients D. Support professional privileges B. Maintain the public trust E. Enable a field to become a profession C. Protect the professional franchise
Describe all of the sources of information systems development requests
What will be an ideal response?