Sales (45,000 units at $10 per unit).. Less cost of goods sold: $450,000 Direct materials Direct labor. Manufacturing overhead $90,000 78,300 98,500 266,800 Gross margin .... Less operating expenses: Selling expenses: 183,200 Variable: Sales commissions $27,000 Shipping 5,400 32,400 .. Fixed (advertising, salaries) Administrative: 120,000 Variable (billing and other) Fixed (salaries and other) 1,800 48,000 202,200 Net operating loss $ (19,000)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The president is considering two proposals prepared by members of his staff:

For next year, the vice president would like to reduce the unit selling price by 20%. She is certain that this would fill the plant capacity. What profits would be under the vice president's proposal?

WHITNEY COMPANY
Income Statement
For the Year Ended December 31
Sales (45,000 units at $10 per unit) .
Less cost of goods sold:
$450,000
Direct materials
$90,000
Direct labor .
78,300
98,500
Manufacturing overhead
266,800
Gross margin ....
Less operating expenses:
Selling expenses:
183,200
Variable:
Sales commissions
$27,000
Shipping
5,400
32,400
Fixed (advertising, salaries)
120,000
Administrative:
Variable (billing and other)
Fixed (salaries and other)
1,800
48,000
202,200
Net operating loss
$ (19,000)
Transcribed Image Text:WHITNEY COMPANY Income Statement For the Year Ended December 31 Sales (45,000 units at $10 per unit) . Less cost of goods sold: $450,000 Direct materials $90,000 Direct labor . 78,300 98,500 Manufacturing overhead 266,800 Gross margin .... Less operating expenses: Selling expenses: 183,200 Variable: Sales commissions $27,000 Shipping 5,400 32,400 Fixed (advertising, salaries) 120,000 Administrative: Variable (billing and other) Fixed (salaries and other) 1,800 48,000 202,200 Net operating loss $ (19,000)
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