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. Manufacturing overhead 78,300 98,500 266,800 Gross margin Less operating expenses: Selling expenses: Variable: 183,200 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
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Whitney Company's board of director believes that the company's problem lies in adequate promotion. By how much can advertising be increased and still allow the company to earn a target profit of 4.5% on slaes of 60,00 units?

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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