The following data is used for questions 1-5. Martin, Inc., is a manufacturer of quality headphones....

70.2K

Verified Solution

Question

Accounting

The following data is used for questions 1-5. Martin, Inc., is amanufacturer of quality headphones. The President believes sheneeds an aggressive advertising campaign next year to maintain thecompany’s growing profitability. The accountant for the company hasprepared the following information for the current year:
Selling price per headphone $70.00
Variable costs per headphone: Direct labor $15.00 Directmaterials 14.00 Variable overhead 6.00 Total variable costs$35.00
Fixed Costs: Manufacturing $90,000 Selling 44,000 Administrative356,000 Total fixed costs $490,000
Expected sales (units) this year 25,000 headphones
For questions 1 – 5, use the above information. Select theclosest answer. For each of these questions refer back to theoriginal data
1. If the costs and sales price remain the same, what is theprojected operating income for the coming year?
A. $ 385,000 B. $ 415,000 C. $ 354,000 D. $ 515,000 E. $409,000
2. What is the break-even point in sales dollars for the comingyear?
A. $ 785,000 B. $ 1,030,000 C. $ 980,000 D. $ 895,000 E. $1,225,000
3. Jan has set the sales target for 35,000 headphones which shethinks she can achieve by an additional fixed selling expense of$400,000 for advertising. All other costs and the selling priceremain the same. What will be the operating income if theadditional $400,000 is spent on advertising?
A. $ 415,000 B. $ 335,000 C. $ 224,500 D. $ 275,000 E. $446,000
4. What will be the new breakeven point if an additional$400,000 is spent for advertising and the Sales price goes up to$75 per set of headphones? All other costs remain the same.
A. 22,250 units B. 15,960 units’ C. 18,750 units D. 20,960 unitsE. 25,500 units
5. If an additional $400,000 is spent for advertising in thenext year and the sales price goes up to $75 per set of headphones,what is the required sales level in units to equal the currentyear’s operating income at 25,000 units calculated in requirement1? Other costs will remain the same.
A. 26,545 units B. 40,945 units C. 36,542 units D. 31,875 unitsE. 29,859 units

Answer & Explanation Solved by verified expert

4.0 Ratings (453 Votes)

Selling price per unit 70 Less variable cost per unit 35 Contribution margin per unit 35 CM ratio 3570 100 50 Q1 Answer is A 385000 See Answer

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

Transcribed Image Text

The following data is used for questions 1-5. Martin, Inc., is amanufacturer of quality headphones. The President believes sheneeds an aggressive advertising campaign next year to maintain thecompany’s growing profitability. The accountant for the company hasprepared the following information for the current year:Selling price per headphone $70.00Variable costs per headphone: Direct labor $15.00 Directmaterials 14.00 Variable overhead 6.00 Total variable costs$35.00Fixed Costs: Manufacturing $90,000 Selling 44,000 Administrative356,000 Total fixed costs $490,000Expected sales (units) this year 25,000 headphonesFor questions 1 – 5, use the above information. Select theclosest answer. For each of these questions refer back to theoriginal data1. If the costs and sales price remain the same, what is theprojected operating income for the coming year?A. $ 385,000 B. $ 415,000 C. $ 354,000 D. $ 515,000 E. $409,0002. What is the break-even point in sales dollars for the comingyear?A. $ 785,000 B. $ 1,030,000 C. $ 980,000 D. $ 895,000 E. $1,225,0003. Jan has set the sales target for 35,000 headphones which shethinks she can achieve by an additional fixed selling expense of$400,000 for advertising. All other costs and the selling priceremain the same. What will be the operating income if theadditional $400,000 is spent on advertising?A. $ 415,000 B. $ 335,000 C. $ 224,500 D. $ 275,000 E. $446,0004. What will be the new breakeven point if an additional$400,000 is spent for advertising and the Sales price goes up to$75 per set of headphones? All other costs remain the same.A. 22,250 units B. 15,960 units’ C. 18,750 units D. 20,960 unitsE. 25,500 units5. If an additional $400,000 is spent for advertising in thenext year and the sales price goes up to $75 per set of headphones,what is the required sales level in units to equal the currentyear’s operating income at 25,000 units calculated in requirement1? Other costs will remain the same.A. 26,545 units B. 40,945 units C. 36,542 units D. 31,875 unitsE. 29,859 units