Data for Whiteworth Ltd. are shown below: Sales price Less: Variable expenses Contribution margin Sales Less: Variable expenses Per Unit $ 80 50 $:30 Contribution margin Less Fixed expenses Net income (loss) 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.) Percentage of Sales Current Sales 100 62.5 37,5 Sales With Additional Advertising Budget Difference
Data for Whiteworth Ltd. are shown below: Sales price Less: Variable expenses Contribution margin Sales Less: Variable expenses Per Unit $ 80 50 $:30 Contribution margin Less Fixed expenses Net income (loss) 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.) Percentage of Sales Current Sales 100 62.5 37,5 Sales With Additional Advertising Budget Difference
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A1
Transcribed Image Text:**Data for Whiteworth Ltd.**
The following information is provided for Whiteworth Ltd.:
- **Sales Price**:
- Per Unit: $80
- Percentage of Sales: 100%
- **Less: Variable Expenses**:
- Per Unit: $50
- Percentage of Sales: 62.5%
- **Contribution Margin**:
- Per Unit: $30
- Percentage of Sales: 37.5%
Fixed expenses amount to $25,000 monthly, and the company sells 2,000 units per month.
**Requirement**:
1-a. The marketing manager suggests that a $4,000 increase in the monthly advertising budget could boost monthly sales by $8,000. Analyze how this change would affect net income. Fill in the table below to solve this problem. Note that negative amounts should be shown with a minus sign (-).
**Table for Analysis**:
| | Current Sales | Sales With Additional Advertising Budget | Difference |
|----------------------------|---------------|------------------------------------------|------------|
| Sales | | | |
| Less: Variable Expenses | | | |
| Contribution Margin | | | |
| Less: Fixed Expenses | | | |
| Net Income (Loss) | | | |
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