Instructions: For each essay question below, please type your response in the text field given below. Do not upload a photo or use any other method. You should label your response to each questions A), B), C) and so on. If you do not follow these instruction, you may lose points or miss the entire question.
A) Senior management has devised a plan to increase sales by 15% in the next three quarters which was successfully implemented and executed. Given the assumptions that the organization is operating within the relevant range and the linearity assumption hold true regarding the behavior of costs as well as the selling price remaining constant with no discretionary increases in fixed costs, how does it explain lower net operating income with higher sales?
B) Please explain and discuss the financial statement impact of the overhead application process, including the affected accounts.
C) Given the current economic climate (i.e., inflationary pressure) along with prices being elastic, what steps should management take to increase profitability and sales of its products assuming 80 percent capacity utilization? Specifically, you need to address how management will increase sales and profitability given the aforementioned factors.
D) Gemtron Company is a diversified electronics company specializing in manufacturing semiconductor chips for a number of products for global organizations. Recently, the company received a special order from a potential new customer. Company A requested that Gemtron manufacture 10,000 semiconductor chips. Gemtron is operating at 90% of its total capacity; therefore, it can fulfil the order without disruption to its normal operations. Gemtrons semiconductor chips normally sells its chips for $20. The finance department provided the following manufacturing cost data to manufacture one chip: direct material $6, direct labor $3, variable manufacturing overhead $2 and fixed manufacturing overhead of $6. Assuming Gemtron accepts the request to fill the special order, what is the minimum unit price should Gemtron charge per unit to make a $10,000 incremental profit?
