6. Using a responsibility income statementShown below is the current monthly income statement of Metro Video, by profit centers:SalesVariable CostsContribution marginFixed costs traceable todepartmentsDepartmentsresponsibility marginsCommon fixed costsIncome from operationsMETRO VIDEOIncome Statement by Profit CentersFor the Month Ended April 30, 20Metro VideoDollars%$560,000 100(268,800) (48)$291,20052(67,200) (12)$224,000(61,600)$162,4004029Equipment SalesDollars$280,000(198,800)$ 81,200(25,200)Segments$56,000%10071)29(09)Video RentalsDollars$280,000(70,000)$210,000(42,000)20 $168,000%100(25)75(15)60On the basis of this information, compute the increase in monthly income fromoperations that may be expected to result from each of the following actions:(a) Spending $5,000 per month in advertising is expected to increase sales in theEquipment Sales Department by 35%. $_(b) Closing the Equipment Sales Department and allowing the Video RentalsDepartment to expand is expected to increase the revenue of the Video RentalsDepartment by $105,000 per month. This action also is expected to increase fixed coststraceable to the Video Rentals Department by $40,000 per month. $

Increase in income is determined by taking difference of earlier standing figure and revised figure.…

Answered: (a) Spending $5,000 per month in…

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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8. A juice bar is currently doing $292,000 a year in sales revenue. Juice cost is 40% and other variable cost is 25% of sales revenue. Fixed costs are $75,000. (a) Calculate annual operating income before tax. (b) The owner wants to increase the manager's salary by $6,000 a year. Find desired sales revenue and maintain the same level of operating income.
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An entertainment company has a net income goal of $19,000/Month. Sales are currently $600,000 annually and fixed costs run $95,000 each year. The company has just launched a new brand campaign that is expected to cost $9,000 monthly and bring in an additional 20% in annual sales. After the launch of the brand campaign, what contribution margin per cent is required to hit the company's income goal? A) 77% B) 40% C) 65% D) 60%
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Selling price is $120 per unit. Variable costs are $78 per unit. Fixed expenses are $249,480 per month. The company is currently selling 6,000 units. The marketing manager believes it can increase sales revenue per unit to $130. It is also increase advertising by $10,000 increase in the monthly advertising budget would result in a 10 percent increase in monthly sales. If these changes are made, what is the net income expected to become? This time you have to calculate total Net Income.
What is the margin, turnover and ROI if the existing company performs the same next year AND it adds the proposed investment? Paul company has the following data for its most recent year end: Sales $1,400,000 Variable Expenses $756,000 Contribution Margin $644,000 Fixed Expenses $410,000 NOI $234,000 AIso Paul is considering an investment in new equipment that willcost $250,000. The new equipment is projected to produce saIes of$420,000 and have variabIe costs of 60% of sales and fixed costs of$114,000.
They collect rent revenue of $20 sf/yr for WalMart ( 100,000 sf) since it is an anchor store. They charge BestBuy $25sf/yr( 70,000 sf) plus 10% of sales that exceeds $200 sf/yr. Sales in the first year of BestBuy is expected to be $160 sq/ft and growing at 6% per year. The boutique store( 30,000 sf) is charged $23 sf/yr plus 10% for sales that exceeds $100 sf/yr. Sales for the boutique store in year 1 is $105 sf/yr and is expected to grow at 4% per year. Calculate the gross potential rental revenue for these three tenants. Thank you.
208. Subject Accounting
7. A company believes that if it spends $30,000 on an advertising campaign for one of its segments, there will be a 20% increment in the segment's sales. The contribution margin for the segment is 60% of sales. Sales for the segment are expected to be $400,000 before the advertising campaign. The relationship of costs to sales is expected to remain the same. The incremental net operating income if the advertising campaign is undertaken is expected to be: a. $48,000 b. $38,000 c. $18,000 d. $ 8,000 e. None of the above. The answer is Answer
If Anna Cullumber, the company’s president, is successful in increasing sales revenue by 5%, by what percent will the company’s operating income increase?

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