The Saunders Company is trying to do some planning for the coming month. The following information...
The Saunders Company is trying to do some planning for the coming month. The following information was gathered from the last month.
| Sales revenue | $300,000 |
| Fixed manufacturing expenses | 110,000 |
| Fixed marketing expenses | 20,000 |
| Fixed administrative expenses | 18,500 |
| Sales price | $20/unit |
| Variable manufacturing costs | $7/unit |
| Variable marketing costs | $3/unit |
If Saunders is able to generate a 20% increase in sales volume next month through a $24,000 advertising campaign, what is the expected operating income?
Homework Answers
|
Income Statement |
||
|
Current (15000 Units) |
Proposed(18000 Units) |
|
|
Sales Revenue |
$ 3,00,000.0 |
$ 3,60,000.0 |
|
Less: Variable Costs |
||
|
Variable manufacturing cost |
$ 1,05,000.0 |
$ 1,26,000.0 |
|
Variable Marketing cost |
$ 45,000.0 |
$ 54,000.0 |
|
Contribution margin |
$ 1,50,000.0 |
$ 1,80,000.0 |
|
Less: Fixed costs |
||
|
Fixed manufacturing cost |
$ 1,10,000.0 |
$ 1,10,000.0 |
|
Fixed marketing cost |
$ 20,000.0 |
$ 44,000.0 |
|
Net Income |
$ 20,000.0 |
$ 26,000.0 |
Expected operating income = $26000
Net income would increase by $6000.
It is assumed that advertisement of 24000 is over and above fixed marketing cost of $20000.
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The Saunders Company is trying to do some planning for the
coming month. The following information...
The Saunders Company is trying to do some planning for the coming month. The following information...
The Saunders Company is trying to do some planning for the coming month. The following information was gathered from the last month. Sales revenue $300,000 Fixed manufacturing expenses 110,000 Fixed marketing expenses 20,000 Fixed administrative expenses 18,500 Sales price $20/unit Variable manufacturing costs $7/unit Variable marketing costs $3/unit How many units must Saunders sell next month to break even?
The Saunders Company is trying to do some planning for the coming month. The following information...
The Saunders Company is trying to do some planning for the coming month. The following information was gathered from the last month. Sales revenue $300,000 Fixed manufacturing expenses 110,000 Fixed marketing expenses 20,000 Fixed administrative expenses 18,500 Sales price $20/unit Variable manufacturing costs $7/unit Variable marketing costs $2/unit If Saunders wants to earn operating income of $44,000 next month, how many units must be sold?
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