Question: Saguaro Manufacturing Inc wishes to determine the profitability of its
Saguaro Manufacturing, Inc. wishes to determine the profitability of its products and asks the cost accountant to make a comparative analysis of sales, cost of sales, and distribution costs of each product for the year. The accountant gathers the following information, which will be useful in preparing the analysis:
Advertising expenses total $600,000 for the year, with an equal amount expended to advertise each product. The sales representative’s commission is based on the selling price of each unit and is 10% for Product X, 14% for Product Y, and 18% for Product Z. The sales manager’s salary of $75,000 per year is allocated evenly to each product. Other miscellaneous selling and administrative expenses are estimated to be $15 per order received. Prepare an analysis for Saguaro Manufacturing, Inc. that will show in comparative form the income derived from the sale of each product for the year.
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