Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Connelly Incorporated, a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Because her
Connelly Incorporated, a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Because 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 Total variable costs Fixed costs Manufacturing Selling Administrative Total fixed costa $13.00 15.50 6.50 $35.00 $ 94,000 70,000 378,000 $542,000 Belling price per unit Expected sales (units) Required: $65 45,500 1. If the costs and sales price remain the same, what is the projected operating profit for the coming year? 2. What is the breakeven point in units for the coming year? 3. Jan has set the sales target for 49,500 Ice cream makers, which she thinks she can achieve by an additional fixed selling expense of $176,150 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional $176,150 is spent on advertising and sales rise to 49,500 units? 4-a. What will be the new breakeven point if the additional $176,150 is spent on advertising? 4-b. Prepare a contribution income statement at the new breakeven point. 4-c. What is the percentage change in both fixed costs and in the breakeven point? 5. If the additional $176,150 is spent for advertising in the next year, what is the sales level (in units) needed to equal the current year's operating profit at 45,500 units? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 48 Req 4C Req 5 What is the percentage change in both fixed costs and in the breakeven point? (Input your answers as percentages rounded to 2 decimal places (Le, .1567 15.67%.).) Percentage change in fixed cost Percentage change in breakeven point >
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