Somerset Company is studying the impact of the following:
1. An increase in sales price on the break-even point.
2. A decrease in fixed costs on the contribution margin.
3. An increase in the contribution margin on the break-even point.
4. A decrease in the variable cost per unit on the sales volume needed to achieve Somerset's $68,000 target net profit.
5. An increase in sales commissions on the contribution margin and the break-even point.
6. A decrease in anticipated advertising outlays on fixed cost and the break-even point.
Required:
Determine the impact of these operating changes (increase, decrease, or no effect) on the item(s) noted.

Question

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The Answer of Somerset Company is studying the impact of the following:
1. An increase in sales price on the break-even point.
2. A decrease in fixed costs on the contribution margin.
3. An increase in the contribution margin on the break-even point.
4. A decrease in the variable cost per unit on the sales volume needed to achieve Somerset's $68,000 target net profit.
5. An increase in sales commissions on the contribution margin and the break-even point.
6. A decrease in anticipated advertising outlays on fixed cost and the break-even point.
Required:
Determine the impact of these operating changes (increase, decrease, or no effect) on the item(s) noted.

Somerset Company Is Studying the Impact of the Following