The president is considering a 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? include both Total and Per Unit columns. WHITNEY COMPANYIncome StatementFor the Year Ended December 31Sales (45,000 units at $10 per unit)Less cost of goods sold:$450,000Direct materials$90,000..Direct labor....Manufacturing overheadGross margin ......Less operating expenses:Selling expenses:Variable:78,30098,500266,800183,200Sales commissions$27,000Shipping5,40032,400...Fixed (advertising, salaries)Administrative:Variable (billing and other)Fixed (salaries and other).120,0001,80048,000202,200Net operating loss$ (19,000)All variable expenses in the company vary in terms of unit sold, except for sales commissions,which are based on sales dollars. Variable manufacturing overhead is 30 cents per unit. There wereno beginning or ending inventories. Whitney Company's plant has a capacity of 75,000 units peryear.

Answered: WHITNEY COMPANY Income Statement For…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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The president is considering a 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? include both Total and Per Unit columns.

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
Gross margin ......
Less operating expenses:
Selling expenses:
Variable:
78,300
98,500
266,800
183,200
Sales commissions
$27,000
Shipping
5,400
32,400
...
Fixed (advertising, salaries)
Administrative:
Variable (billing and other)
Fixed (salaries and other).
120,000
1,800
48,000
202,200
Net operating loss
$ (19,000)
All variable expenses in the company vary in terms of unit sold, except for sales commissions,
which are based on sales dollars. Variable manufacturing overhead is 30 cents per unit. There were
no beginning or ending inventories. Whitney Company's plant has a capacity of 75,000 units per
year.

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