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Parts E & F please! Davis Devices makes an electronic bathroom scale that can connect to a smartphone and automatically record various measurem for tracking
Parts E & F please!
Davis Devices makes an electronic bathroom scale that can connect to a smartphone and automatically record various measurem for tracking progress. Davis has experienced reasonable growth in the three years it has been selling the scale, where advertising was often by word of mouth and reviews left on online e-commerce sites. The Chief Marketing Officer (CMO) at Davis believes that a formal advertising campaign will be necessary to continue the current growth trend. To prepare for the campaign, the company's cost analyst has prepared and presented the following financial data for the current year, year 1 : The CMO has set the sales target for year 2 at a level of $2,540,000 (or 47,000 units). The CMO believes that market conditions prevent any possible increase in price. Required: a. What is the projected after-tax operating profit for year 1 ? b. What is the break-even point in units for year 1 ? c. The CMO believes that attaining the sales target (47,000 units) will require additional selling expenses of $52,500 for advertising in year 2 , with all other costs remaining constant. What will be the after-tax operating profit for year 2 if the firm spends the additional $52,500 ? d. What will be the break-even point in sales dollars for year 2 if the firm spends the additional $52,500 for advertising? Note: Solve by computing volume in units first. e. If the firm spends the additional $52,500 for advertising in year 2 , what is the sales level in dollars required to equal the year 1 aftel tax operating profit? Note: Solve by computing volume in units first. f. At a sales level of 47,000 units, what is the maximum amount the firm can spend on advertising to earn an after-tax operating profit of $717,522Step by Step Solution
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