Analyzing Operational ChangesOperating results for department B of Delta Company during the year are as follows: Sales $538,000 Cost of goods sold 378,000 Gross profit 160,000 Direct expenses 120,000 Common expenses 66,000 Total expenses 186,000 Net loss $(26,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $48,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 15%, the effect on net income (loss) would be $________?
Analyzing Operational ChangesOperating results for department B of Delta Company during the year are as follows: Sales $538,000 Cost of goods sold 378,000 Gross profit 160,000 Direct expenses 120,000 Common expenses 66,000 Total expenses 186,000 Net loss $(26,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $48,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 15%, the effect on net income (loss) would be $________?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Analyzing Operational Changes
Operating results for department B of Delta Company during the year are as follows:
| Sales | $538,000 | |
| Cost of goods sold | 378,000 | |
| Gross profit | 160,000 | |
| Direct expenses | 120,000 | |
| Common expenses | 66,000 | |
| Total expenses | 186,000 | |
| Net loss | $(26,000) |
If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $48,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.)
Use a negative sign with your answer to indicate if the effect increases the company's net loss.
If Department B increased its selling price by 15%, the effect on net income (loss) would be $________?
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