answer question b and c
(Continued) White and Co Lid wish to know what the net income before tax would be in the years 2019 to 2025, if Denitron's sales in 2020 will be $2,000,000 and for each year of trading thereafter, its trading will follow the ratios of sales growth and variable costs as a percentage of sales seen in Peritron's forecasts. Required a Calculate the sales and variable costs for Deritron and produce a long-term budget for the years 2019 to 2025 for the company as a whole. (10 marks) b) Calculate the percentage net income growth for each year from 2020 and comment on the results, considering that White and Co Lid has a target of 20% growth in net income before tax. Advise White and Co Lid on other strategic measures which would help to meet their targets. (6 marks) C) Show the product life cycle budget for Deriton and briefly comment on the performance of the product. (4 marks)2. White and Co Lid has a target to grow its net income before tax by 20% per year. It has several products in regular demand which generate the following performance each year: EOOO Sales revenue 6,000 Variable costs 1,200 Attributable fixed costs 500 Attributable advertising 600 White and Co Lid also introduces more exciting products regularly with short lifecycles. The forecasts for the two products currently in production are: 2019 2020 2021 2022 2023 2024 2025 EOOO EOOO EO00 E000 E000 E000 EO00 Manitron Sales 600 400 150 Variable costs 150 100 90 Attributable fixed costs 20 20 20 200 Advertising 100 50 20 Peritron Sales 750 1,506 2,500 2,000 1000 400 Variable costs 75 500 1,000 1,000 700 300 Attributable fixed costs 30 30 30 30 30 30 300 Advertising 150 150 150 200 200 20 The company's common fixed costs are $1,600,000 in 2019 and are expected to increase by 2% per year. Peritron's first year of trading was 2019 and it is expected to cease trading in 2024. A new product, the Deritron, has been developed and tested and is due to be launched in 2020. Attributable Development costs for Deritron of $2,000,000 were incurred in the years up to 2018. These were included in research and development expenses and were written off by including them in common fixed costs in the years in which they were incurred Deritron has the following expenditure forecasts: Pre-product launch expenditure for Deritron of E200,000 will be incurred in 2019. It is expected that Deritron will not trade in 2026 and there will be disposal expenses of $350,000 in that year. Deritron's forecast attributable fixed costs and advertising costs per year are shown below. Deritron 2020 2021 2022 2023 2024 2025 E000 E000 E000 2000 E000 E000 Attributable fixed costs 40 40 40 40 40 40 Advertising 800 200 100 100 150 150 Question continues on next page
