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With regards to Sing's price, cost, and product, what can be concluded from Scenario #2?

With regards to Sing's price, cost, and product, what can be concluded from Scenario #2?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You are presented with the following three scenarios for Sing Company: #1 Revenue (15 units x $5) Less: COGS (15 units * $3) Gross Margin Less: SG&A Exp. Operating Income (Loss) $75 45 30 50 ($20) #2 Revenue (10 units x $15) Less: COGS (10 units x $3) Gross Margin Less: SG&A Exp. Operating Income $150 30 120 50 $70 #3 Revenue (12 units < $10) Less: COGS (12 units × $3) Gross Margin Less: SG&A Exp. Operating Income $120 36 84 50 $34 With regards to Sing's price, cost, and product, what can be concluded from Scenario #2? O Sing Company has a profit because it is not charging a high enough price to cover the costs incurred. O Sing Company should have incurred a loss because its sales in units are lower in this scenario than any other option. O Sing Company can make a profit by increasing its unit selling price, but the unit sales are normally going to decrease, and may result in the company being driven out of the market due to competitors having lower unit selling prices. O Sing Company can raise its price to become profitable without having to worry about unit sales declining or other competitors with lower selling prices driving it out of the market.
Transcribed Image Text:You are presented with the following three scenarios for Sing Company: #1 Revenue (15 units x $5) Less: COGS (15 units * $3) Gross Margin Less: SG&A Exp. Operating Income (Loss) $75 45 30 50 ($20) #2 Revenue (10 units x $15) Less: COGS (10 units x $3) Gross Margin Less: SG&A Exp. Operating Income $150 30 120 50 $70 #3 Revenue (12 units < $10) Less: COGS (12 units × $3) Gross Margin Less: SG&A Exp. Operating Income $120 36 84 50 $34 With regards to Sing's price, cost, and product, what can be concluded from Scenario #2? O Sing Company has a profit because it is not charging a high enough price to cover the costs incurred. O Sing Company should have incurred a loss because its sales in units are lower in this scenario than any other option. O Sing Company can make a profit by increasing its unit selling price, but the unit sales are normally going to decrease, and may result in the company being driven out of the market due to competitors having lower unit selling prices. O Sing Company can raise its price to become profitable without having to worry about unit sales declining or other competitors with lower selling prices driving it out of the market.
You are presented with the following three scenarios for Sing Company: #1 Revenue (15 units x $5) Less: COGS (15 units * $3) Gross Margin Less: SG&A Exp. Operating Income (Loss) $75 45 30 50 ($20) #2 Revenue (10 units x $15) Less: COGS (10 units x $3) Gross Margin Less: SG&A Exp. Operating Income $150 30 120 50 $70 #3 Revenue (12 units < $10) Less: COGS (12 units × $3) Gross Margin Less: SG&A Exp. Operating Income $120 36 84 50 $34 With regards to Sing's price, cost, and product, what can be concluded from Scenario #2? O Sing Company has a profit because it is not charging a high enough price to cover the costs incurred. O Sing Company should have incurred a loss because its sales in units are lower in this scenario than any other option. O Sing Company can make a profit by increasing its unit selling price, but the unit sales are normally going to decrease, and may result in the company being driven out of the market due to competitors having lower unit selling prices. O Sing Company can raise its price to become profitable without having to worry about unit sales declining or other competitors with lower selling prices driving it out of the market.
Transcribed Image Text:You are presented with the following three scenarios for Sing Company: #1 Revenue (15 units x $5) Less: COGS (15 units * $3) Gross Margin Less: SG&A Exp. Operating Income (Loss) $75 45 30 50 ($20) #2 Revenue (10 units x $15) Less: COGS (10 units x $3) Gross Margin Less: SG&A Exp. Operating Income $150 30 120 50 $70 #3 Revenue (12 units < $10) Less: COGS (12 units × $3) Gross Margin Less: SG&A Exp. Operating Income $120 36 84 50 $34 With regards to Sing's price, cost, and product, what can be concluded from Scenario #2? O Sing Company has a profit because it is not charging a high enough price to cover the costs incurred. O Sing Company should have incurred a loss because its sales in units are lower in this scenario than any other option. O Sing Company can make a profit by increasing its unit selling price, but the unit sales are normally going to decrease, and may result in the company being driven out of the market due to competitors having lower unit selling prices. O Sing Company can raise its price to become profitable without having to worry about unit sales declining or other competitors with lower selling prices driving it out of the market.
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