Calle Company Is Studying the Impact of the Following

question 16

Essay

Calle Company is studying the impact of the following:
1. An increase in sales price.
2. An increase in the variable cost per unit.
3. An increase in the number of units sold (note: each unit produces a $6 contribution margin).
4. A decrease in fixed costs.
5. A proposed change in the method of compensation for salespeople, away from commissions based on gross sales dollars and toward higher monthly salaries.
Required:
Determine the impact of each of these operating changes on Calle’s per-unit contribution margin and break-even point by completing the chart that follows. Your responses should be Increase (INC), Decrease (DEC), No Effect (NE), or Insufficient Information to Judge (II).

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Definitions:

International Shoe Co. v. State of Washington

A landmark Supreme Court case establishing the standard for what constitutes sufficient minimum contacts within a state for the exercise of jurisdiction over an out-of-state defendant.

Appellate Courts

Courts that review and make rulings on appeals from lower court decisions, primarily focusing on issues of law rather than fact.

Questions of Law

Issues concerning the interpretation or application of laws, typically decided by a judge rather than a jury.

Questions of Fact

Issues regarding the actual events or circumstances of a case that are determined by a jury or judge in a trial.