Smart Video Company Income Statement for the Year Ended December 31, 2017 (in thousands) Revenues $8,00 Equipment Maintenance contracts 1,900 $9,900 Total revenues Cost of goods sold 4,000 5,900 Gross margin Operating costs Marketing 630 Distribution 100 1,100 Customer maintenance Administration 920 Total operating costs 2,750 $3,150 Operating income Smart Video's management team is preparing the 2018 budget and is studying the following information:
Smart Video Company Income Statement for the Year Ended December 31, 2017 (in thousands) Revenues $8,00 Equipment Maintenance contracts 1,900 $9,900 Total revenues Cost of goods sold 4,000 5,900 Gross margin Operating costs Marketing 630 Distribution 100 1,100 Customer maintenance Administration 920 Total operating costs 2,750 $3,150 Operating income Smart Video's management team is preparing the 2018 budget and is studying the following information:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Smart Video Company is a manufacturer of videoconferencing products. Maintaining the videoconferencing equipment is an important area of customer satisfaction. A recent downturn in the computer industry has caused the videoconferencing equipment segment to suffer, leading to a decline in Smart Video’s financial performance. The following income statement shows results for 2017:
Q.Equipment sales in units are expected to increase by 6%, with a corresponding 6% growth in units of maintenance contracts.
Transcribed Image Text:Smart Video Company Income Statement for the Year Ended December 31, 2017 (in thousands)
Revenues
$8,00
Equipment
Maintenance contracts
1,900
$9,900
Total revenues
Cost of goods sold
4,000
5,900
Gross margin
Operating costs
Marketing
630
Distribution
100
1,100
Customer maintenance
Administration
920
Total operating costs
2,750
$3,150
Operating income
Smart Video's management team is preparing the 2018 budget and is studying the following information:
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