5. The sales manager is convinced that a 13% reduction in the selling price, combined with a $77,000 increase in advertising, wouldincrease this year's unit sales by 25%.a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented?b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows:$ 2,160,0001,080,0001,080,000160,000SalesVariable expensesContribution marginFixed expensesNet operating income$ 920,000

5. The sales manager is convinced that a 13% reduction in the selling price, combined with a $77,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year?

5. The sales manager is convinced that a 13% reduction in the selling price, combined with a $77,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $10 per unit, and fixed expenses total $190,000 per year. Its operating results for last year were as follows: Sales (23,900 units) Variable expenses Contribution margin Fixed expenses Operating income $ 460,000 230,000 230,000 1990,000 40,000 $
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An advertising program will cost (outflow) $420,000 today BUT will generate net profits of $50,000 over the next 15 years. Further, they would have to re-affirm the brand with a minor media campaign costing $40,000 (outflow) in 5 years from today. Determine the expected yield (rate of return OR IRR) on the program?
Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity For Year Ended December 31 Sales Cost of goods sold Other operating expenses Current Year $ 31,800 89,500 112,500. 10,700 278,500 $ 523,000 Interest expense Income tax expense Total costs and expenses Net income. Earnings per share $ 129,900 98,500 163,500 131,100 $ 523,000 Current Year $ 411,225 209,550 1 Year Ago $ 35,625 62,500 82,500 9,375 255,000 $ 445,000 The company's income statements for the current year and one year ago follow. Assume that all sales are on credit: 4 12,100 9,525 $ 75,250 101,500 163,500 104,750 $ 445,000 $ 673,500 2 Years Ago 642,400 $ 31,100 $ 1.90 $ 37,800 50,200 54,000 5,000 230,500 $ 377,500 $51,250 83,500 163,500 79,250 $ 377,500 1 Year Ago $ 345,500…
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