Manufacturing costs Direct materials Direct labor Variable overhead Fixed overhead (total for the year: $300,000) Selling and administrative expenses Variable Fixed (total for the year: $480,000) $35 12 8 5 15 8 Required: (1) Vanguard Electric Product Company normally sells 60,000 units of shaver per year. It is predicted that a rise in unit selling price to $98 will decrease volume by 10%. How much may advertising be increased under this plan without onnual net income fall below the current level? (Ignore income taxes)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Vanguard Electric Product Company makes and sells shaver. Thefollowing are the unit costs of making and selling a single product at a normal leveof 5,000 units per month and a current unit selling price of $90:

Manufacturing costs
Direct materials
Direct labor
Variable overhead
Fixed overhead (total for the year: $300,000)
Selling and administrative expenses
Variable
Fixed (total for the year: $480,000)
$35
12
8
5
15
8
Required:
(1) Vanguard Electric Product Company normally sells 60,000 units of shaver per
year. It is predicted that a rise in unit selling price to $98 will decrease volume
by 10%. How much may advertising be increased under this plan without
onnual net income fall below the current level? (Ignore income taxes)
Transcribed Image Text:Manufacturing costs Direct materials Direct labor Variable overhead Fixed overhead (total for the year: $300,000) Selling and administrative expenses Variable Fixed (total for the year: $480,000) $35 12 8 5 15 8 Required: (1) Vanguard Electric Product Company normally sells 60,000 units of shaver per year. It is predicted that a rise in unit selling price to $98 will decrease volume by 10%. How much may advertising be increased under this plan without onnual net income fall below the current level? (Ignore income taxes)
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