The president is considering a proposals prepared by members of his staff. For next year, the sales manager would to increase the unit selling price by 20%, increase the sales commission by 9%, and increase advertising by $100,00. Basaed on marketing studies, he is confident this would increase unit sales by one third. What profits would be under the sales manager's proposal? include both Total and Per Unit columns. WHITNEY COMPANYIncome StatementFor the Year Ended December 31Sales (45,000 units at $10 per unit)Less cost of goods sold:$450,000Direct materials$90,000..Direct labor....Manufacturing overheadGross margin ......Less operating expenses:Selling expenses:Variable:78,30098,500266,800183,200Sales commissions$27,000Shipping5,40032,400...Fixed (advertising, salaries)Administrative:Variable (billing and other)Fixed (salaries and other).120,0001,80048,000202,200Net operating loss$ (19,000)All variable expenses in the company vary in terms of unit sold, except for sales commissions,which are based on sales dollars. Variable manufacturing overhead is 30 cents per unit. There wereno beginning or ending inventories. Whitney Company's plant has a capacity of 75,000 units peryear.

In the above question, the management is considering a proposal to increase advertisement expenses…

Answered: e president is considering a proposals…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 24E: Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual...

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The president is considering a proposals prepared by members of his staff. For next year, the sales manager would to increase the unit selling price by 20%, increase the sales commission by 9%, and increase advertising by $100,00. Basaed on marketing studies, he is confident this would increase unit sales by one third. What profits would be under the sales manager's proposal? include both Total and Per Unit columns.

WHITNEY COMPANY
Income Statement
For the Year Ended December 31
Sales (45,000 units at $10 per unit)
Less cost of goods sold:
$450,000
Direct materials
$90,000
..
Direct labor....
Manufacturing overhead
Gross margin ......
Less operating expenses:
Selling expenses:
Variable:
78,300
98,500
266,800
183,200
Sales commissions
$27,000
Shipping
5,400
32,400
...
Fixed (advertising, salaries)
Administrative:
Variable (billing and other)
Fixed (salaries and other).
120,000
1,800
48,000
202,200
Net operating loss
$ (19,000)
All variable expenses in the company vary in terms of unit sold, except for sales commissions,
which are based on sales dollars. Variable manufacturing overhead is 30 cents per unit. There were
no beginning or ending inventories. Whitney Company's plant has a capacity of 75,000 units per
year.

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