Question
Exercise 2 ABC Canada Inc. is a BC based company selling premium TV stands throughout the country. The company just released its projections for
Exercise 2 ABC Canada Inc. is a BC based company selling premium TV stands throughout the country. The company just released its projections for their 2022 Year End based on 100,000 of TV stands sales as follows: Sales Revenue 7,500,000$ Variable Expenses: Cost of Goods Sold 3,500,000$ Electricity and Heat 115,000$ Fixed Expenses: Sales force Salary 375,000$ Depreciation Rent Expenses Utilities 70,000$ 85,000$ 15.000$ Total Operating Income Before Tax 3,340,000$ Less Taxes at 35% Net Income 1,169,000$ 2,171,0005 The above results are based on ABC Canada Inc's production capacity of 150,000 units. If their production volume would exceed their capacity, the company needs to expand its facility. As such certain expenses would increase as follows: Salaries will increase by 20%, Depreciation by 15% and heating/electricity by 5% while Rent would increase by 25%. Requirement 1. Prepare projected Income Statement for ABC Canada Inc for production output of for 125,000 units 2. Prepare projected Income Statement for ABC Canada Inc for production output of for 175,000 units
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