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Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casuall mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719

Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casuall mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719

International Financial Management
International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter10: Measuring Exposure To Exchange Rate Fluctuations
Section: Chapter Questions
Problem 49QA
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(a)  if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide?

Maximum discount= in %

In this case, will you have a negative impact on the profitability of the business? (yes or no)

(b)  if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the profitability? (in %)

Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719
Transcribed Image Text:Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719
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