Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3 B O 1 22 23 24 25 26 Calibri (Body) BIU fx B H A C D E G H Merge & Cheertime

image text in transcribedimage text in transcribed

3 B O 1 22 23 24 25 26 Calibri (Body) BIU fx B H A C D E G H Merge & Cheertime Company produces three lines of greeting cards scented, musical, and regular. There are common fixed expenses of $7,500 (meaning this expense is applied only 1 time no matter if the company produces one line or all three lines). The additional financial information for all three lines is below: Scented: Sales $ 10,000 Variable expenses $ 7,000 Advertising $ 4,000 Musical: Sales $ 15,000 Variable expenses Advertising SS $ 12,000 $ 5,000 Regular: Sales $ 25,000 Variable expenses $ 12,500 Advertising $ 3,000 With the current financial information, Cheertime's current operating income is a loss of $1,000. For 2022, the president of Cheertime is considering two alternatives to cut down on losses 1) completely eliminating the scented and musical card lines which she projects will decrease the sales and variable expenses of the regular greeting card line by 20%. Or 2) Increasing advertising by $250 for the scented line and $750 for the musical line which she projects will increase the sales and variable expenses of BOTH of these lines by 30%. 1. Create an income statement below for the first alternative. Formulas should be used in the cells for all calculations and proper accounting protocols should be followed. The following items are the accounts for the income statement (they are not listed in order here, but must be in the correct order on your income statement!). (9 points) Sales Operating income Contribution margin Variable expenses Common fixed expenses Advertising

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial ACCT2

Authors: Norman H. Godwin, C. Wayne Alderman

2nd edition

9781285632544, 1111530769, 1285632540, 978-1111530761

More Books

Students also viewed these Accounting questions

Question

What does the payoff function for a typical manager look like?

Answered: 1 week ago