Kosinksi Manufacturing carries no inventories. Its product is manufactured only when a customers order is received. It

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Kosinksi Manufacturing carries no inventories. Its product is manufactured only when a customer’s order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2022, Kosinksi’s break-even point was $1,350,000. On sales of $1.3 million, its full-cost income statement showed a gross profit of $200,000, direct materials cost of $400,000, and direct labour costs of $500,000. The contribution margin was $117,000, and variable manufacturing overhead was $100,000.


Instructions 

a. Calculate the following: 

1. Variable selling and administrative expenses 

2. Fixed manufacturing overhead 

3. Fixed selling and administrative expenses 

b. Ignoring your answer to part (a), assume that fixed manufacturing overhead was $100,000 and the fixed selling and administrative expenses were $80,000. The marketing vice-president feels that, if the company increased its advertising, sales could be increased by 15%. Determine the maximum increased advertising cost the company can incur and still report the same income as before the advertising expenditure, assuming that the contribution margin ratio remains unchanged.  

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Related Book For  book-img-for-question

Managerial Accounting Tools For Business Decision Making

ISBN: 9781119731825

6th Canadian Edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Ibrahim M. Aly, Donald E. Kieso

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