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Data for Whiteworth Ltd. are shown below: Sales price Less: Variable expenses Contribution margin Sales Less: Variable expenses Per Unit $ 80 50 $:30 Contribution margin Less Fixed expenses Net income (loss) Fixed expenses are $25,000 per month, and the company is selling 2,000 units per month. Required: 1-a. The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $8,000. Show the effect of this change on the net income? Complete the table given below to answer the question. (Negative amounts should be indicated by a minus sign.) Percentage of Sales Current Sales 100 62.5 37,5 Sales With Additional Advertising Budget Difference

Data for Whiteworth Ltd. are shown below: Sales price Less: Variable expenses Contribution margin Sales Less: Variable expenses Per Unit $ 80 50 $:30 Contribution margin Less Fixed expenses Net income (loss) Fixed expenses are $25,000 per month, and the company is selling 2,000 units per month. Required: 1-a. The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $8,000. Show the effect of this change on the net income? Complete the table given below to answer the question. (Negative amounts should be indicated by a minus sign.) Percentage of Sales Current Sales 100 62.5 37,5 Sales With Additional Advertising Budget Difference

FINANCIAL ACCOUNTING
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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**Data for Whiteworth Ltd.** The following information is provided for Whiteworth Ltd.: - **Sales Price**: - Per Unit: $80 - Percentage of Sales: 100% - **Less: Variable Expenses**: - Per Unit: $50 - Percentage of Sales: 62.5% - **Contribution Margin**: - Per Unit: $30 - Percentage of Sales: 37.5% Fixed expenses amount to $25,000 monthly, and the company sells 2,000 units per month. **Requirement**: 1-a. The marketing manager suggests that a $4,000 increase in the monthly advertising budget could boost monthly sales by $8,000. Analyze how this change would affect net income. Fill in the table below to solve this problem. Note that negative amounts should be shown with a minus sign (-). **Table for Analysis**: | | Current Sales | Sales With Additional Advertising Budget | Difference | |----------------------------|---------------|------------------------------------------|------------| | Sales | | | | | Less: Variable Expenses | | | | | Contribution Margin | | | | | Less: Fixed Expenses | | | | | Net Income (Loss) | | | |
Transcribed Image Text:**Data for Whiteworth Ltd.** The following information is provided for Whiteworth Ltd.: - **Sales Price**: - Per Unit: $80 - Percentage of Sales: 100% - **Less: Variable Expenses**: - Per Unit: $50 - Percentage of Sales: 62.5% - **Contribution Margin**: - Per Unit: $30 - Percentage of Sales: 37.5% Fixed expenses amount to $25,000 monthly, and the company sells 2,000 units per month. **Requirement**: 1-a. The marketing manager suggests that a $4,000 increase in the monthly advertising budget could boost monthly sales by $8,000. Analyze how this change would affect net income. Fill in the table below to solve this problem. Note that negative amounts should be shown with a minus sign (-). **Table for Analysis**: | | Current Sales | Sales With Additional Advertising Budget | Difference | |----------------------------|---------------|------------------------------------------|------------| | Sales | | | | | Less: Variable Expenses | | | | | Contribution Margin | | | | | Less: Fixed Expenses | | | | | Net Income (Loss) | | | |
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