L.D. Smith and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth...

 

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L.D. Smith and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Smith, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Smith with the following data for the current year, 2017: (Click the icon to view the data.) Read the requirements. Requirement 1. What is the projected net income for 2017? Using the equation method, select the basic formula used to compute the target net income for 2017. Variable costs Fixed costs = Target net income Revenues ... The target net income for 2017 is 1 - Tax rate Data table Variable cost (per bowl) Direct materials Direct manufacturing labor Variable overhead (manufacturing, marketing, distribution and customer service) Total variable cost per bowl Fixed costs Manufacturing Marketing, distribution, and customer service Total fixed costs Selling price Expected sales, 21,000 units Income tax rate GA $ 3.25 7.50 2.85 13.60 15,000 270,600 $285,600 34.00 714,000 40% Requirements 1. 2. 3. 4. 5. 6. What is the projected net income for 2017? What is the breakeven point in units for 2017? Mr. Smith has set the revenue target for 2018 at a level of $816,000 (or 24,000 bowls). He believes an additional marketing cost of $12,240 for advertising in 2018, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2018 if the additional $12,240 is spent and the revenue target is met? What is the breakeven point in revenues for 2018 if the additional $12,240 is spent for advertising? If the additional $12,240 is spent, what are the required 2018 revenues for 2018 net income to equal 2017 net income? At a sales level of 24,000 units, what maximum amount can be spent on advertising if a 2018 net income of $114,156 is desired? L.D. Smith and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Smith, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Smith with the following data for the current year, 2017: (Click the icon to view the data.) Read the requirements. Requirement 1. What is the projected net income for 2017? Using the equation method, select the basic formula used to compute the target net income for 2017. Variable costs Fixed costs = Target net income Revenues ... The target net income for 2017 is 1 - Tax rate Data table Variable cost (per bowl) Direct materials Direct manufacturing labor Variable overhead (manufacturing, marketing, distribution and customer service) Total variable cost per bowl Fixed costs Manufacturing Marketing, distribution, and customer service Total fixed costs Selling price Expected sales, 21,000 units Income tax rate GA $ 3.25 7.50 2.85 13.60 15,000 270,600 $285,600 34.00 714,000 40% Requirements 1. 2. 3. 4. 5. 6. What is the projected net income for 2017? What is the breakeven point in units for 2017? Mr. Smith has set the revenue target for 2018 at a level of $816,000 (or 24,000 bowls). He believes an additional marketing cost of $12,240 for advertising in 2018, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2018 if the additional $12,240 is spent and the revenue target is met? What is the breakeven point in revenues for 2018 if the additional $12,240 is spent for advertising? If the additional $12,240 is spent, what are the required 2018 revenues for 2018 net income to equal 2017 net income? At a sales level of 24,000 units, what maximum amount can be spent on advertising if a 2018 net income of $114,156 is desired?

Answer rating: 100% (QA)

1 Projected net Income for 2017 Particulars Sales less Variable cost Direct materials Direct manufac... View the full answer