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Prepare a variable costing (contribution margin) income statement for Rays for the year ended December 31, 20X6. Rays marketing vice president believes a new sales promotion that costs $150,000 would increase sales to 200,000 goggles. Should the company go ahead with the promotion? Give your reason.

Prepare a variable costing (contribution margin) income statement for Rays for the year ended December 31, 20X6. Rays marketing vice president believes a new sales promotion that costs $150,000 would increase sales to 200,000 goggles. Should the company go ahead with the promotion? Give your reason.

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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The 20X6 data that follow pertain to Rays, a manufacturer of swimming goggles. Rays had no beginning inventories in January 20X6. Selling price per unit Variable manufacturing expense per unit Sales commission expense per unit Fixed manufacturing overhead Fixed operating expense # of goggles produced # of goggles sold $35.00 $15.00 $5.00 $2,000,000 $250,000 200,000 185,000 Required: b) Prepare a variable costing (contribution margin) income statement for Rays for the year ended December 31, 20X6. c) Rays marketing vice president believes a new sales promotion that costs $150,000 would increase sales to 200,000 goggles. Should the company go ahead with the promotion? Give your reason.
Transcribed Image Text:The 20X6 data that follow pertain to Rays, a manufacturer of swimming goggles. Rays had no beginning inventories in January 20X6. Selling price per unit Variable manufacturing expense per unit Sales commission expense per unit Fixed manufacturing overhead Fixed operating expense # of goggles produced # of goggles sold $35.00 $15.00 $5.00 $2,000,000 $250,000 200,000 185,000 Required: b) Prepare a variable costing (contribution margin) income statement for Rays for the year ended December 31, 20X6. c) Rays marketing vice president believes a new sales promotion that costs $150,000 would increase sales to 200,000 goggles. Should the company go ahead with the promotion? Give your reason.
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