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The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating Expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense Total operating expenses Net income Central Valley Company Comparative Income Statement March 6,900 April 6,400 $793,500 $736,000 421,350 397,440 $372,150 $338,560 $ 65,300 $ 52,200 98,500 98,500 166,500 133,500 18,500 18,500 51,500 51,500 $400,300 $354,200 $ (28,150) May 8,100 $931,500 484,380 $447,120 $ 68,800 98,500 171,000 18,500 51,500 $408,300 $ (15,640) $ 38,820 June 9,800 $1,127,000 574,770 $ 552,230 $ 61,500 98,500 164,000 18,500 51,500 $ 394,000 $ 158,230

The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating Expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense Total operating expenses Net income Central Valley Company Comparative Income Statement March 6,900 April 6,400 $793,500 $736,000 421,350 397,440 $372,150 $338,560 $ 65,300 $ 52,200 98,500 98,500 166,500 133,500 18,500 18,500 51,500 51,500 $400,300 $354,200 $ (28,150) May 8,100 $931,500 484,380 $447,120 $ 68,800 98,500 171,000 18,500 51,500 $408,300 $ (15,640) $ 38,820 June 9,800 $1,127,000 574,770 $ 552,230 $ 61,500 98,500 164,000 18,500 51,500 $ 394,000 $ 158,230

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating Expenses Shipping expense Advertising expense Salaries and commissions. Insurance expense Amortization expense Total operating expenses Net income Central Valley Company Comparative Income Statement March April 6,900 $793,500 $736,000 421,350 397,440 $372,150 $338,560 $ 65,300 $ 52,200 98,500 98,500 166,500 133,500 18,500 18,500 51,500 51,500 $400,300 $354,200 $ (28,150) $ (15,640) 6,400 May 8,100 $931,500 484,380 $447,120 $ 68,800 98,500 171,000 June 9,800 $1,127,000 574,770 $ 552,230 $ 61,500 98,500 164,000 18,500 18,500 51,500 51,500 $408,300 $ 394,000 $ 38,820 $ 158,230
Transcribed Image Text:The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating Expenses Shipping expense Advertising expense Salaries and commissions. Insurance expense Amortization expense Total operating expenses Net income Central Valley Company Comparative Income Statement March April 6,900 $793,500 $736,000 421,350 397,440 $372,150 $338,560 $ 65,300 $ 52,200 98,500 98,500 166,500 133,500 18,500 18,500 51,500 51,500 $400,300 $354,200 $ (28,150) $ (15,640) 6,400 May 8,100 $931,500 484,380 $447,120 $ 68,800 98,500 171,000 June 9,800 $1,127,000 574,770 $ 552,230 $ 61,500 98,500 164,000 18,500 18,500 51,500 51,500 $408,300 $ 394,000 $ 38,820 $ 158,230
Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 89,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) Break-even sales Annual profit (89,500 units) units Calculate the change in profit if the selling price were reduced by $14.0 each and annual sales were to increase by 8,800 units. Determine the change in profit if the company were to increase advertising by $119,000 and if this were to increase sales by 8,800 units.
Transcribed Image Text:Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 89,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) Break-even sales Annual profit (89,500 units) units Calculate the change in profit if the selling price were reduced by $14.0 each and annual sales were to increase by 8,800 units. Determine the change in profit if the company were to increase advertising by $119,000 and if this were to increase sales by 8,800 units.
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