Problem 1

The J. Page Furniture Company has the following information available regarding costs for 20x0, which is the current fiscal year:

	Fixed Costs per unit	Variable Cost Per Unit
Costs and Expenses
Cost of goods sold	$0.00	$16.00
Wages and salaries	4.50	6.00
Supplies expenses	0.50	.80
Utilities expenses	0.45	1.60
Rental charges	2.40	2.40
Advertising and promotional	0.75	2.00
Other costs and expenses	0.38	1.20

Additionally, the company sells its product for $40.00 per unit and, during fiscal year 20x0, they sold 20,000 units.

(For all analysis, ignore income taxes, as applicable)

Required

For fiscal year ending 12/31/20x0, prepare an Income Statement in the contribution margin format.

For fiscal year 20x1, the company would like to increase profits 80% above their 20x0 amount. If they maintain the selling price and related cost structure, as given above, determine the amount of sales (in units and sales dollars) the company would have to achieve to meet their 20x1 profit goal.

For 20x1, the companys CEO is proposing a 15% increase in the selling price. With that selling price increase, the planning team anticipates a 10% decrease in fiscal year 20x1 unit sales vs 20x0 unit sales. Given these proposed changes, but with the same cost structure indicated above,

Determine the companys 20x1 net income

Prepare a revised Income Statement in the contribution format.

List the key assumptions associated with cost, volume, and profit analysis.