Data for Whiteworth Ltd. are shown below: Percentage of Sales Per Unit Sales price $.80 100 Less: Variable expenses 50 62.5 Contribution margin $ 30 37.5 Fixed expenses are $25,000 per month, and the company is selling 2,000 units per month. Required: 1-a. The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $8,000. Show the effect of this change on the net income? Complete the table given below to answer the question. (Negative amounts should be indicated by a minus sign.) Current Sales Sales With Additional Advertising Budget Difference Sales Less: Vanable expenses Contribution margin Less Fixed expenses Net income (loss)
Data for Whiteworth Ltd. are shown below: Percentage of Sales Per Unit Sales price $.80 100 Less: Variable expenses 50 62.5 Contribution margin $ 30 37.5 Fixed expenses are $25,000 per month, and the company is selling 2,000 units per month. Required: 1-a. The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $8,000. Show the effect of this change on the net income? Complete the table given below to answer the question. (Negative amounts should be indicated by a minus sign.) Current Sales Sales With Additional Advertising Budget Difference Sales Less: Vanable expenses Contribution margin Less Fixed expenses Net income (loss)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Data for Whiteworth Ltd. are shown below:
Percentage
Per Unit
of Sales
Sales price
Less: Variable expenses
$ 80
50
100
62.5
Contribution margin
$ 30
37.5
Fixed expenses are $25,000 per month, and the company is selling 2,000 units per month.
Required:
1-a. The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by
$8,000. Show the effect of this change on the net income? Complete the table given below to answer the question. (Negative
amounts should be indicated by a minus sign.)
Current
Sales
Sales With
Additional
Advertising
Budget:
Difference
Sales
Less Variable expenses
Contribution margin
Less: Fixed expenses
Net income (loss)
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