Q+1: The income statement for the Stylo Company for the past ycaris: $4,500,000 Sales (150000 units a S30) Cost of Goods Sold: $1,050,000 1,500,000 450,000 Materials Labour Variable FOH Fixed FOH 500.000 3.500,000 $1,000,000 Gross Profit Variable Marketing Expenses Fixed Marketing Expenses Fixed Administrative Expenses $ 135,000 185,00 180.000 500.000 S 500,000 250,000 S 250,000 Income before Tax Income Tax Net Inco me Woodstock is preparing its budget for the coming ycar and has made the following predictions about cost increases: material 5%, labour 8%, all other costs including fived 6%. Productive capacity is 200,000 unils. The president has been offered various proposals by the division managers as follows: Maintain the present volume and sales price Produce and sell at capacity and reduce the unit price $28. Raisc the unit pricc to $32, spend an cxtra * 300,000 on advertising, and producc and scll 180,000 un its. Required: Recommended action, based on quantification of altematives

Q+1: The income statement for the Stylo Company for the past ycaris: $4,500,000 Sales (150000 units a S30) Cost of Goods Sold: $1,050,000 1,500,000 450,000 Materials Labour Variable FOH Fixed FOH 500.000 3.500,000 $1,000,000 Gross Profit Variable Marketing Expenses Fixed Marketing Expenses Fixed Administrative Expenses $ 135,000 185,00 180.000 500.000 S 500,000 250,000 S 250,000 Income before Tax Income Tax Net Inco me Woodstock is preparing its budget for the coming ycar and has made the following predictions about cost increases: material 5%, labour 8%, all other costs including fived 6%. Productive capacity is 200,000 unils. The president has been offered various proposals by the division managers as follows: Maintain the present volume and sales price Produce and sell at capacity and reduce the unit price $28. Raisc the unit pricc to $32, spend an cxtra * 300,000 on advertising, and producc and scll 180,000 un its. Required: Recommended action, based on quantification of altematives

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q # 1: The income statement for the Stylo Company for the past year is: Sales (150000 units @ $30) Cost of Goods Sold: $4,500,000 Materials $1,050,000 1,500,000 450,000 500,000 Labour Variable FOH 3,500,000 $1,000,000 Fixed FOH Gross Profit Variable Marketing Expenses Fixed Marketing Expenses Fixed Administrative Expenses $ 135,000 185,000 180,000 500,000 $ 500,000 250,000 $ 250,000 Income before Tax Income Tax Net Inco me Woodstock is preparing its budget for the coming year and has made the following predictions about cost increases: material 5%, labour 8%, all other costs including fixed 6%. Productive capacity is 200,000 units. The president has been offered various proposals by the division managers as follows: Maintain the present volume and sales price Produce and sell at capacity and reduce the unit price $28. Raise the unit price to $32, spend an extra # 300,000 on advertising, and produce and sell 180,000 un its. Required: Recommended action, based on quantification of…
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