A company is considering reducing its advertising budget by $300,000. Management estimates this will result in a loss of 5,000 unit sales. If the gross margin is $50 per unit, should they proceed with the budget cut?
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Should they proceed with the budget cut ?
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- Nitin Sweets believes its advertising expenditures are too high and wants to cut $600,000 from the budget. Management estimates that this decision will result in a loss of 12,000 units in sales. If the gross margin per unit is $50, does cutting the advertising budget make sense? answer thisNitin Sweets believes its advertising expenditures are too high and wants to cut $600,000 from the budget. Management estimates that this decision will result in a loss of 12,000 units in sales. If the gross margin per unit is $50, does cutting the advertising budget make sense?Please solve this question general Accounting
- Provide answerKindly, answer the following: a. The sales manager feels that an P110,000 increase in monthly advertising budget, combined with an intensified effort by the sales staff will result in a P840,000 increase in monthly sales. Considering these changes, what will be the company’s increase or decrease in profit? b. The president is convinced that a 10% reduction in the selling price, combined with an increase of P35,000 in the monthly advertising budget, will cause units sales to double. Considering these changes, how much is the company’s expected profit? c. A new package for the product is being considered to induce sales. This package costs P0.60 per unit. Considering the new package cost, how many units would have to be sold each month to earn a profit ofP90,000?Carousel Co. has prepared the following budget data: Sales, 150,000 units; selling price per unit, P25.00; variable cost per unit, P15.00; fixed costs and expenses, P1,300,000. An advertising agency claims that an aggressive advertising campaign would enable the company to increase its unit sales by 20%. What is the maximum amount that the company can pay for advertising and obtain a net operating income of P300,000?
- The company just hired a new marketing manager who insists unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget: Year 2 Quarter Year 3 Quarter Data 1 2 3 4 1 2 Budgeted unit sales 45,000 65,000 105,000 60,000 90,000 100,000 Selling price per unit $7 After seeing this revised budget, the production manager cautioned that due to the limited availability of a complex milling machine, the plant can produce no more than 80,000 units in any one quarter. Is this a potential problem?Eagle Sales has developed the following budgeted income statement. The company is experimenting with new engineering techniques and believes it can reduce variable cost to $4 per unit and significantly improve the product. The innovations would increase fixed cost to $10,000. The company expects to be able to maintain current sales (2,500 units). Assuming Eagle decides to pursue this strategy, by what amount would the budgeted profit ?change Sales Revenue (2.500 units x $10 sales price) Total Variable Expenses (2,500 x S6 per unit). Contribution Margin Fixed Expenses Net Income S25,000 (15,000) 10,000 (6,000) $4.000 decrease by $4,000 ) increase by S4,000 decrease by $1,000 O decrease by $2,000 increase by $1,000Please do not give solution in image format ?