Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. more info data table option 1 is to increase adver

More Info Data Table Option 1 is to increase advertising by $1,400 per month. Option...

90.2K

Verified Solution

Question

Accounting

image

More Info Data Table Option 1 is to increase advertising by $1,400 per month. Option 2 is to use better-quality materials in the manufacturing process. The better materials will increase the cost of goods sold to 65% but will provide a better product at the same sales price. The marketing manager projects either option will result in sales increases of 25% per month rather than 20%. Gambrell Company Budgeted Income Statement For the Quarter Ended March 31, 2018 Total January February March Print Done Net Sales Revenue (20% increase per month) $ 25,000$ 30,000$ 36,000$ 91,000 15,000 18,000 21,600 54,600 Cost of Goods Sold (60% of sales) 1 Requirements Gross Profit 10,000 12,000 14,400 36,400 4,600 5,080 13,880 S and A Expenses ($2,200 8% of sales) 4,200 Operating Income 7,400 5,800 9,320 22,520 1. Prepare budgeted income statements for bath options, assuming both options begin in January and January sales remain S25,000. Round all calculations to the nearest dollar 580 740 932 2,252 Income Tax Expense (10% of operating income) 5,220 $ 6,660 $ 8,388 $ 20,268 Net Income 2. Which option should Gambrell choose? Explain your reasoning. PrintDone Print Done

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students