Question
Blossom Footwear Co. produces high-quality shoes. To prepare for next years marketing campaign, the companys controller has prepared the following information for the current year,
Blossom Footwear Co. produces high-quality shoes. To prepare for next years marketing campaign, the companys controller has prepared the following information for the current year, 2022:
a. Calculate the projected operating income before tax for 2022.
b. Calculate the break-even point in units for 2020.
c. The company controller has set the revenue target for 2021 at $10,062,000 (or 55,900 pairs). He believes an additional marketing cost of $446,000 for advertising in 2021, with all other costs remaining constant, will be necessary to attain the revenue target. Calculate the operating income for 2021 if the additional $446,000 is spent and the revenue target is met.
$39 20 Variable costs (per pair of shoes) Direct materials Direct manufacturing labour Variable overhead (manufacturing, marketing, distribution, customer service, and administration) Total variable costs 20 $79 Fixed costs Manufacturing Marketing, distribution, and customer service Administrative Total fixed costs $2,750,000 530,000 700,000 $3.980,000 Selling price per pair of shoes Expected revenues, 2022 (51,800 units) Income tax rate $179 $9.272,200 40%Step by Step Solution
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