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D.L. Brown and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Brown, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Brown with the following data for current year, 2020: (Click the icon to view the data.) Read the requirements. Requirement 1. What is the projected net income for 2020? Using the equation method, select the basic formula used to compute the target net income for 2020. ÷ Data table Requirements 1. What is the projected net income for 2020? 2. What is the breakeven point in units for 2020? 3. 4. 5. 6. Mr. Brown has set the revenue target for 2021 at a level of $690,000 (or 23,000 bowls). He believes an additional marketing cost of $19,440 for advertising in 2021, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2021 if the additional $19,440 is spent and the revenue target is met? What is the breakeven point in revenues for 2021 if the additional $19,440 is spent for advertising? If the additional $19,440 is spent, what are the required 2021 revenues for 2021 net income to equal 2020 net income? At a sales level of 23,000 units, what maximum amount can be spent on advertising if a 2021 net income of $75,666 is desired? Variable cost (per bowl) ☑ Direct materials Direct manufacturing labor Variable overhead (manufacturing, marketing, distribution and customer service) Total variable cost per bowl Fixed costs $ EA 3.75 7.50 2.55 $ 13.80 Manufacturing $ 12,000 Marketing, distribution, and customer service 214,800 Total fixed costs $ 226,800 Selling price $ 30.00 Expected sales, 19,500 units $ 585,000 Income tax rate 40% -

D.L. Brown and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Brown, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Brown with the following data for current year, 2020: (Click the icon to view the data.) Read the requirements. Requirement 1. What is the projected net income for 2020? Using the equation method, select the basic formula used to compute the target net income for 2020. ÷ Data table Requirements 1. What is the projected net income for 2020? 2. What is the breakeven point in units for 2020? 3. 4. 5. 6. Mr. Brown has set the revenue target for 2021 at a level of $690,000 (or 23,000 bowls). He believes an additional marketing cost of $19,440 for advertising in 2021, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2021 if the additional $19,440 is spent and the revenue target is met? What is the breakeven point in revenues for 2021 if the additional $19,440 is spent for advertising? If the additional $19,440 is spent, what are the required 2021 revenues for 2021 net income to equal 2020 net income? At a sales level of 23,000 units, what maximum amount can be spent on advertising if a 2021 net income of $75,666 is desired? Variable cost (per bowl) ☑ Direct materials Direct manufacturing labor Variable overhead (manufacturing, marketing, distribution and customer service) Total variable cost per bowl Fixed costs $ EA 3.75 7.50 2.55 $ 13.80 Manufacturing $ 12,000 Marketing, distribution, and customer service 214,800 Total fixed costs $ 226,800 Selling price $ 30.00 Expected sales, 19,500 units $ 585,000 Income tax rate 40% -

FINANCIAL ACCOUNTING
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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D.L. Brown and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Brown, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Brown with the following data for current year, 2020: (Click the icon to view the data.) Read the requirements. Requirement 1. What is the projected net income for 2020? Using the equation method, select the basic formula used to compute the target net income for 2020. ÷ Data table Requirements 1. What is the projected net income for 2020? 2. What is the breakeven point in units for 2020? 3. 4. 5. 6. Mr. Brown has set the revenue target for 2021 at a level of $690,000 (or 23,000 bowls). He believes an additional marketing cost of $19,440 for advertising in 2021, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2021 if the additional $19,440 is spent and the revenue target is met? What is the breakeven point in revenues for 2021 if the additional $19,440 is spent for advertising? If the additional $19,440 is spent, what are the required 2021 revenues for 2021 net income to equal 2020 net income? At a sales level of 23,000 units, what maximum amount can be spent on advertising if a 2021 net income of $75,666 is desired? Variable cost (per bowl) ☑ Direct materials Direct manufacturing labor Variable overhead (manufacturing, marketing, distribution and customer service) Total variable cost per bowl Fixed costs $ EA 3.75 7.50 2.55 $ 13.80 Manufacturing $ 12,000 Marketing, distribution, and customer service 214,800 Total fixed costs $ 226,800 Selling price $ 30.00 Expected sales, 19,500 units $ 585,000 Income tax rate 40% -
Transcribed Image Text:D.L. Brown and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Brown, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Brown with the following data for current year, 2020: (Click the icon to view the data.) Read the requirements. Requirement 1. What is the projected net income for 2020? Using the equation method, select the basic formula used to compute the target net income for 2020. ÷ Data table Requirements 1. What is the projected net income for 2020? 2. What is the breakeven point in units for 2020? 3. 4. 5. 6. Mr. Brown has set the revenue target for 2021 at a level of $690,000 (or 23,000 bowls). He believes an additional marketing cost of $19,440 for advertising in 2021, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2021 if the additional $19,440 is spent and the revenue target is met? What is the breakeven point in revenues for 2021 if the additional $19,440 is spent for advertising? If the additional $19,440 is spent, what are the required 2021 revenues for 2021 net income to equal 2020 net income? At a sales level of 23,000 units, what maximum amount can be spent on advertising if a 2021 net income of $75,666 is desired? Variable cost (per bowl) ☑ Direct materials Direct manufacturing labor Variable overhead (manufacturing, marketing, distribution and customer service) Total variable cost per bowl Fixed costs $ EA 3.75 7.50 2.55 $ 13.80 Manufacturing $ 12,000 Marketing, distribution, and customer service 214,800 Total fixed costs $ 226,800 Selling price $ 30.00 Expected sales, 19,500 units $ 585,000 Income tax rate 40% -
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