Simple CVP analysis Penny Berlin Company's income statement for July follows. Man- agement believes that monthly sales
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Simple CVP analysis Penny Berlin Company's income statement for July follows. Man- agement believes that monthly sales can increase by 20 percent if an advertising campaign costing $1,500 per month is started.
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Sales (400 units) ... Less cost of goods sold: Direct labor.... PENNY BERLIN COMPANY Income Statement For the Month Ended July 31, 1992 $40,000 $6,400 Direct materials 5,600 MOH (40 percent fixed) Gross margin 5,000 17,000 $23,000 Selling and administrative expenses: Selling (50 percent fixed) $8,000 Administrative (80 percent fixed) 5,000 13,000 Net income before tax $10,000
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