Feed 'N Grow Co. manufactures fertilizer for farmers in the prairies. It specialises infertilizer that helps crops grow during dry seasons. The income statement presentedbelow shows the operating results for the fiscal year just ended. Feed 'N Grow hadsales of 1,800 tonnes of product during that year. The maximum output under theexisting manufacturing facilities at Feed 'N Grow is 4,800 tonnes.Feed 'N Grow Co.RevenuesVariable Costs:Income StatementFor the year ended June 30, Year 6Direct materialsDirect labourSales commissionsMaintenance expensesAdministration expensesTotal variable costsFixed costs:Amortization - Factory equipmentMarketing expensesAdministrators' salariesOtherTotal fixed costsOperating income before income taxesIncome taxesNet Income225,00075,00055,00044,00033,000125,00090,00060,00025,350$1,080,000432,000300,350347,65069,530$ 278,120Required:a) If the sales volume is estimated to increase by 600 tonnes for next year, and if the sellingprice and cost behaviour patterns remain the same next year, how much net income doesFeed 'N Grow expect to earn next year? Show all your calculations.b) Assume Feed 'N Grow estimates the selling price per tonne will increase 10% nextyear due to the popular demand of the product and variable cost will increase by $57per tonne. To cope with the expected additional demand, the company is going to hiretwo more administrative assistants at a total cost of $65,000 per year. Compute howmany tonnes must be sold next year to earn net income of $1,000,000. Show all yourcalculations.

Net income is generally the last line item that appears on the income statement. It is calculated by…

Answered: If the sales volume is estimated to…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

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Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 8EA: Using the information in the previous exercises about Marleys Manufacturing, determine the operating...

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If the sales volume is estimated to increase by 600 tonnes for next year, and if the selling price and cost behaviour patterns remain the same next year, how much net income does Feed 'N Grow expect to earn next year? Show all your calculations.