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believes an additional marketing cost of 112508 for advertising in 2006 ,with all other costs Q2)Acompany, amanufacture of quality handmade walnut bowls, has had asteady
believes an additional marketing cost of 112508 for advertising in 2006 ,with all other costs Q2)Acompany, amanufacture of quality handmade walnut bowls, has had asteady growth in sales for the past five years. However,increased competition has led Mr Ro, the president to believe that an aggressive marketing campaign will be neceerary next year to maintain the companys present growth to prepare for next year marketing compaign the company s controller has prepard and presented Mr.Ro With the following data for the current year 2005 Variable cost (per bowl) Direct materials 3.25$ Direct manufacturing labor 8.00S Variable overhead (manufacturing marketing distribution and customer service) 2.50 Total variable cost per bowl 13.75 Fixed cost Manufacturing 25000 Marketing , distribution and customer service 110000 Total fixed costs 135000 Selling price 25.00 Expected sales ,20000 500000S income tax rate 40% Required 1)what is the projected net income for 2005? 54 - 2)what is the breakeven point in units for 2005? 3)Mr. Ro has set the revenue target for 2006-a8 at level of 550000s (or 22000 bowls).He remaining constant, will be necessary to attain the revenue target what is the net income for 2006 if the additional 11250$ is spent and the revenue target is met? V2
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