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Joan Hill, President of Hill & Hill Pens, was looking forward to receiving the company's second quarter income statement. She knew that the sales budget
Joan Hill, President of Hill & Hill Pens, was looking forward to receiving the company's second quarter income statement. She knew that the sales budget of 20,000 units sold had been met during the second quarter and that this was an increase of 25% over the first quarter sales units. She was happy about the increase in sales, since Hill & Hill Pens was about to approach its bank for additional loan money for expansion purposes. She anticipated the strong second-quarter results would be a real plus in persuading the bank to extend the additional credit.- For this reason, Joan was shocked when she saw the first two quarters income statement below. Instead of increasing operating income, there was a decrease. Hill & Hill Pens Income Statements For the First Two Quarters First Quarter $1,600,000 e Second Quarter $2,000,000+ Sales -COGS Beg Inve COGM -End Inve +/- Adj for PVve $ 210,000 1,400,000 04 490,000 980,000
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