Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's suppliers suggested that Whitcomb could increase its profitability by 50 percent if it introduced a second line of products, packaged dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made. When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you." Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer. Required: Complete the below table by filling in the blank cells. Note: Enter all amounts as positive values. Sales Costs Material Labor Rent Depreciation Utilities Other Total costs Operating profit WHITCOMB FOODS Projected Annual Income Statement Status Quo: Single Product S 150,000 30,000 6,000 3,000 10,500 S 114,000 S 36,000 % Increase Alternative: (Decrease) Two Products 30 % $ 195,000 $ 40 % 20 % 0% 25 % 25 % % % 42,000 7.500 Difference 15,750 45,000 12,000 1,500 5,250
Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's suppliers suggested that Whitcomb could increase its profitability by 50 percent if it introduced a second line of products, packaged dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made. When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you." Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer. Required: Complete the below table by filling in the blank cells. Note: Enter all amounts as positive values. Sales Costs Material Labor Rent Depreciation Utilities Other Total costs Operating profit WHITCOMB FOODS Projected Annual Income Statement Status Quo: Single Product S 150,000 30,000 6,000 3,000 10,500 S 114,000 S 36,000 % Increase Alternative: (Decrease) Two Products 30 % $ 195,000 $ 40 % 20 % 0% 25 % 25 % % % 42,000 7.500 Difference 15,750 45,000 12,000 1,500 5,250
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's
suppliers suggested that Whitcomb could increase its profitability by 50 percent if it introduced a second line of products, packaged
dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made.
When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the
meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you."
Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis.
They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer.
Required:
Complete the below table by filling in the blank cells.
Note: Enter all amounts as positive values.
Sales
Costs
Material
Labor
Rent
Depreciation
Utilities
Other
Total costs
Operating profit
WHITCOMB FOODS
Projected Annual Income Statement
Status Quo:
Single Product
$
150,000
$
S
30,000
6,000
3,000
10,500
114,000
36,000
% Increase Alternative:
(Decrease) Two Products
30 % $ 195,000 $
40 %
20 %
0%
25 %
25 %
%
%
42,000
7,500
Difference
15,750
45,000
12,000
1,500
5,250
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education