Data concerning Lemelin Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 230 100 % Variable expenses 115 50 % Contribution margin $ 115 50 % The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $20 per unit. In exchange, the sales staff would accept a decrease in their salaries of $113,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 300 units. What should be the overall effect on the company's monthly net operating income of this change

Lemelin Corporation

The overall effect on the company's monthly net operating income of this change is an increase of $1,500.

Explanation:

a) Data and Calculations:

Sales units per month = 7,000

Fixed expenses per month = $581,000

                                Per Unit   Percent of Sales

Selling price               $ 230            100 %

Variable expenses         115             50 %

Contribution margin   $ 115             50 %

Income Statements

                                  Before Change      After Change        Difference

Sales unit                        7,000                      7,300                     300

Sales revenue                $1,610,000           $1,679,000           $69,000

Variable cost of sales       805,000                839,500            -34,500

Sales commission           0                               146,000          -146,000

Contribution margin      $805,000              $693,500          ($111,500)

Fixed expenses                581,000                 468,000            113,000

Net operating income  $224,000               $225,500             $1,500

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.