NDLOVU INDUSTRIES PROJECTED INCOME STATEMENT FOR THE CURRENT YEAR ENDING DECEMBER 3 1 Sales R 7 5
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Question:
NDLOVU INDUSTRIES
PROJECTED INCOME STATEMENT FOR THE CURRENT YEAR ENDING DECEMBER
Sales
R
Less variable costs:
Variable manufacturing costs
R
Variable selling costs
Total variable costs
Contribution margin
R
Less fixed costs:
Fixed manufacturing costs
R
Fixed selling and administrative costs
Total fixed costs
Operating income profit
R
The projected income statement was based on sales of units. Ndlovu has the capacity to produce units during the year.
Required:
a
Determine the breakeven point in units. b The sales manager believes the company could increase sales by units if advertising expenditures were increased by R Determine the effect on income if the company increases advertising expenditures.
c
What is the maximum amount the company could pay for advertising if the advertising would increase sales by units?
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