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Gadgets of the Past (GOP) produces old-fashioned simple corkscrews. Last year was not a good year for sales but GOP expects the market to pick
Gadgets of the Past (GOP) produces old-fashioned simple corkscrews. Last year was not a good year for sales but GOP expects the market to pick up this year. Last year's income statem showed E: (Click the icon to view the income statement.) To take advantage of the anticipated growth in the market, GOP is considering various courses of action: 1. Do nothing. If GOP does nothing, it expects sales to increase by 10%. 2. Spend $3,000 on a new advertising campaign that is expected to increase sales by 60%. 3. Raise the price of the corkscrew to $5.50. This is expected to decrease sales quantities by 20%. 4. Redesign the classic corkscrew and increase the selling price to $7.00 while increasing the variable costs by $1.00 per unit. The sales level is not expected to change from last year. Requirements Evaluate each of the alternatives considered by GOP. What should GOP do? 1 Sales Revenue Data Table Variable Costs Contribution Margin 12,000 Fixed Costs $ 80,000 60,000 Operating Income Sales revenues ($4.00 per corkscrew) Variable cost ($3.00 per corkscrew) Contribution margin 20,000 12,000 Enter any number in the edit fields and then click Check Answer. Fixed cost $ 8,000 Operating income parts remaining Check Answer Print Done
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