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Data Concerning Fowler Corporation's Single Product Appear Below Fixed Costs Are $444,000 Per Month

question 11

Essay

Data concerning Fowler Corporation's single product appear below:
 Per Uni  Percent of Sales  Selling price $210100% Variable costs 12660% Contribution margin $8440%\begin{array} { | l | r | r | } \hline & \text { Per Uni } & \text { Percent of Sales } \\\hline \text { Selling price } & \$ 210 & 100 \% \\\hline \text { Variable costs } & \underline{ 126 }& \underline{ 60 \% }\\\hline \text { Contribution margin } & \$ 84 & { 40 \% } \\\hline\end{array}
Fixed costs are $444,000 per month.The company is currently selling 7,000 units per month.Required:
Management is considering using a new component that would increase the unit variable cost by $2.Since the new component would improve the company's product,the marketing manager predicts that monthly sales would increase by 200 units.What should be the overall effect on the company's monthly operating profit of this change if fixed costs are unaffected?

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Definitions:

Specialized Cells

Cells differentiated to perform specific functions in an organism, such as muscle cells for movement.

Receptors

Specialized cells or protein molecules in the body that receive and respond to chemical signals, such as neurotransmitters or hormones.

Energy

The capacity to do work or produce change, existing in various forms such as kinetic, potential, thermal, and others.

Electromagnetic Spectrum

The range of all types of electromagnetic radiation, from gamma rays to radio waves, including visible light.

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