Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
$ USING THE DECISION TOOLKIT B. T. Hernandez Company, maker of high-quality flashlights, has experienced steady growth over the last sis year However, increased competition
$ USING THE DECISION TOOLKIT B. T. Hernandez Company, maker of high-quality flashlights, has experienced steady growth over the last sis year However, increased competition has led Mr. Hernandez, the president to believe that an aggressive campaign is needed next year to maintain the company's present growth. The company's accountant has presented Mr. Hernandez with the following data for the current year, 2016, for use in preparing next year's advertising campaign. COST SCHEDULES Variable costs Direct labour per flashlight BOM 8.00 Direct materials 4.00 Variable overhead 3.00 Variable cost per flashlight $ 15.00 Fixed costs Manufacturing $ 25,000 Selling 40,000 Administrative 70.000 Total fixed costs $135,000 $ 25.00 Selling price per flashlight $500,000 Expected sales, 2014420,000 flashlights) Mr. Hernandez has set the sales target for the year 2017 at $550,000 (22,000 flashlights). Instructions (Ignore any income tax considerations.) (a) What is the projected operating income for 2013 (b) What is the contribution margin per unit for 2016 (c) What is the break-even point in units for 2016? (d) Mr. Hernandez believes that to attain the sales target in the year 2017, the company must incur an additional selling expense of $10,000 for advertising in 2017, with all other costs remaining constant. What will be the break- even point in sales dollars for 2017 if the company spends the additional $10,000? (e) If the company spends the additional $10,000 for advertising in 2017, what is the sales level in dollars required to equal 2016 operating income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started