Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Connelly, Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Since her business
Connelly, Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Since her business has grown, Jan DeJaney, the president, believes she needs an aggressive advertising campaign next year to maintain the company's growth. To prepare for the growth, the accountant prepared the following data for the current year: Variable costs per ice cream maker Direct labor Direct materials Variable overhead $ 17.00 20.50 8.50 Total variable costs $ 46.00 Fixed costs Manufacturing Selling Administrative $108,500 63,000 450,000 Total fixed costs $621,500 Selling price per unit Expected sales (units) $85.00 36,000 Required 1. If the costs and sales price remain the same, what is the projected operating profit for the coming year? Projected operating profit 782,500 2. What is the breakeven point in units for the coming year? (Round your answer up to the nearest whole number) Breakeven point 15,936 units 3. Jan has set the saes target for 40,800 ice cream makers, which she thinks she can achieve by an additional fixed selling expense of $248,600 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional 5248,800 is spent on advertising and sales rise to 40,800 units? erating profit 721,100 4-a. What will be the new breakeven point if the additional $248,600 is spent on advertising? (Round your answer up to the nearest whole number). breakeven units 4-b. Prepare a contribution income statement at the new break-even point. CONNELLY, INC. Contribution Income Statement ales revenue ess: Variable costs Contribution margin ess: Fixed costs Original amount Incremental amount Operating profit 4-c What is the percentage change in both fixed costs and in the breakeven point? (Input your answers as whole percentages rounded to 2 decimal places (i.e., .1567 15.67%).) Percentage change in fixed cost Percentage change in breakeven point 5. If the additional 5248,800 is spent for advertising in the next year, what is the sales level (in units) needed to equal the current year's income at 36,000 units? (Round your answer up to the nearest whole number). ales level units
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started