Question

Use the following information to answer the questions below: Next year, Rad Shirt Company expects to...

Use the following information to answer the questions below:
Next year, Rad Shirt Company expects to sell 32,000 shirts. Rad is budgeting the following operating results for next year:
Sales $800,000
Variable expenses 288,000
Contribution margin 512,000
Fixed expenses 192,000
Net operating income $320,000

Rad is considering increasing its advertising by $48,000 next year. By how much would sales have to increase in order for Rad to still generate a $320,000 net operating income?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

In order for Rad to still generate a $320,000 net operating income sales has to increase by $75,000

Working

Sales $      800,000.00
Variable cost $      288,000.00
Contribution margin $      512,000.00
Contribution margin ratio (512000/800000) 64%
Fixed cost plus desired profit (192000+48000+320000) $      560,000.00
Sales to attain desired profit (560000/64%) $      875,000.00
Sales earlier $      800,000.00
Increase in sales (875000-800000) $        75,000.00
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following...
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 90,000 Variable expenses 49,500 Contribution margin 40,500 Fixed expenses 33,210 Net operating income $ 7,290 7. If the variable cost per unit increases by $1, spending on advertising increases by $1,800, and unit sales increase by 260 units, what...
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following...
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 40,000 Variable expenses 26,000 Contribution margin 14,000 Fixed expenses 8,680 Net operating income $ 5,320 1. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating...
Required information [The following information applies to the questions displayed below.] Raner, Harris & Chan is...
Required information [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given: Office Total Company Chicago Minneapolis Sales $ 600,000 100.0 % $ 120,000 100 %...
[The following information applies to the questions displayed below.] Baskin Promotions, Inc. sells T-shirts decorated for...
[The following information applies to the questions displayed below.] Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 88,000 T-shirts: Sales $ 1,547,040 Cost of Goods Sold 909,040 Gross Profit 638,000 Operating Expenses ($100,000 is fixed) 450,240 Operating Income 187,760 Income Taxes (30% of operating income) 56,328 Net Income $ 131,432     Cost of goods sold and variable operating expenses...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 32,000 of these balls, with the following results: Sales (32,000 balls) $ 800,000 Variable expenses 480,000 Contribution margin 320,000 Fixed expenses 211,000 Net operating income $ 109,000 5. Refer...
[The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format...
[The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 30,000 Variable expenses 16,500 Contribution margin 13,500 Fixed expenses 7,830 Net operating income $ 5,670 1. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? 2....
The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting...
The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given: Office Total Company Chicago Minneapolis Sales $ 450,000 100 % $ 150,000 100 % $ 300,000...
Use the following information for the next four (4) questions. Bel Air Company provided the following...
Use the following information for the next four (4) questions. Bel Air Company provided the following data for the current year: Sales - 10,000,000 Cost of goods sold-5,300,000 Operating Expense- 3,800,000 December 31 January 1 Preparing operating expense 1,000,000 700,000 Accounts Payable 1,350,000 1,200,000 Inventory 2,500,000 2,100,000 Accounts receivable 1,400,000 1,375,000 1. How much was the collections from sales? 2. What amount was paid to suppliers? 3. How much was paid for operating expenses? 4. How much is the cash...
Required information Skip to question [The following information applies to the questions displayed below.] Oslo Company...
Required information Skip to question [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 35,000 Variable expenses 21,000 Contribution margin 14,000 Fixed expenses 8,400 Net operating income $ 5,600 13. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase...
THORNTON COMPANY Income Statements for the Year 2018 Segment A B C Sales $ 169,000 $...
THORNTON COMPANY Income Statements for the Year 2018 Segment A B C Sales $ 169,000 $ 248,000 $ 259,000 Cost of goods sold (128,000 ) (76,000 ) (88,000 ) Sales commissions (23,000 ) (32,000 ) (28,000 ) Contribution margin 18,000 140,000 143,000 General fixed operating expenses (allocation of president’s salary) (43,000 ) (48,000 ) (34,000 ) Advertising expense (specific to individual divisions) (6,000 ) (13,000 ) 0 Net income $ (31,000 ) $ 79,000 $ 109,000 Required Prepare comparative income...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT