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

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Connelly Incorporated, 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 $13.50 14.50 6.00 Variable overhead Total variable costs $ 34.00 Fixed costs $ 82,500 Manufacturing Selling 42,000 356,000 Administrative Total fixed costs $ 480,500 Selling price per unit $67.00 30,000 Expected sales (units) 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 35,000 ice cream makers, which she thinks she can achieve by an additional fixed selling expense of $200,000 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional $200,000 is spent on advertising and sales rise to 35,000 units? 4-a. What will be the new breakeven point if the additional $200,000 is spent on advertising? 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 $200,000 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 30,000 units? Connelly Incorporated, 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 $13.50 14.50 6.00 Variable overhead Total variable costs $ 34.00 Fixed costs $ 82,500 Manufacturing Selling 42,000 356,000 Administrative Total fixed costs $ 480,500 Selling price per unit $67.00 30,000 Expected sales (units) 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 35,000 ice cream makers, which she thinks she can achieve by an additional fixed selling expense of $200,000 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional $200,000 is spent on advertising and sales rise to 35,000 units? 4-a. What will be the new breakeven point if the additional $200,000 is spent on advertising? 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 $200,000 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 30,000 units?

Answer rating: 100% (QA)

Solution 1 Sales 6700 Variable cost 3400 Contribution 330030000 99000... View the full answer