Connelly Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in...

 

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Connelly Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Because her business has grown, Jan DeJaney, the president, believes she needs an aggressive advertising campaign next year to maintain the company's growth. To prepare for the growth, the accountant prepared the following data for the current year Variable costs per ice cream maker Direct labor Direct materials Variable overhead ६ 20.00 24.00 10.00 Total variable costs $ 54.00 Fixed costs Manufacturing Selling Administrative $101, 000 48,000 366,000 Total fixed costs Selling price per unit Expected sales (units) $515,000 S 100 50, 500 Required: 1. If the costs and sales price remain the same, what is the projected operating profit for the coming year? 2 What is the breakeven point in units for the coming year? 3. Jan has set the sales target for 54,400 ice cream makers, which she thinks she can achieve by an additional fixed selling expense of $226,600 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional $226,600 is spent on advertising and sales rise to 54,400 units? 4-a. What will be the new brea 4-b. Prepare a contribution income statement at the new breakeven point. 4-c. What is the percentage change in both fixed costs and in the breakeven point? 5. If the additional $226,600 is spent for advertising in the next year, what is the sales level (in units) needed to equal the current year's operating profit at 50,500 units? ven point if the additional $226,600 is spent on advertising? Connelly Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Because her business has grown, Jan DeJaney, the president, believes she needs an aggressive advertising campaign next year to maintain the company's growth. To prepare for the growth, the accountant prepared the following data for the current year Variable costs per ice cream maker Direct labor Direct materials Variable overhead ६ 20.00 24.00 10.00 Total variable costs $ 54.00 Fixed costs Manufacturing Selling Administrative $101, 000 48,000 366,000 Total fixed costs Selling price per unit Expected sales (units) $515,000 S 100 50, 500 Required: 1. If the costs and sales price remain the same, what is the projected operating profit for the coming year? 2 What is the breakeven point in units for the coming year? 3. Jan has set the sales target for 54,400 ice cream makers, which she thinks she can achieve by an additional fixed selling expense of $226,600 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional $226,600 is spent on advertising and sales rise to 54,400 units? 4-a. What will be the new brea 4-b. Prepare a contribution income statement at the new breakeven point. 4-c. What is the percentage change in both fixed costs and in the breakeven point? 5. If the additional $226,600 is spent for advertising in the next year, what is the sales level (in units) needed to equal the current year's operating profit at 50,500 units? ven point if the additional $226,600 is spent on advertising?

Answer rating: 100% (QA)

Solution 1 Sales 100 perunit x 50500 units 5050000 LessVariable Costs 54 per unit x 50500 units 2727... View the full answer