Target ProfitRefer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales.1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? $2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? $Cover-to-Cover CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8Sales $409,000 Variable costs: Manufacturing expense$245,400 Selling expense20,450 Administrative expense61,350(327,200) Contribution margin $81,800 Fixed costs: Manufacturing expense$5,000 Selling expense4,000 Administrative expense11,450(20,450)Operating income $61,350 Income Statement - Biblio FilesBiblio Files CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8Sales $409,000 Variable costs: Manufacturing expense$163,600 Selling expense16,360 Administrative expense65,440(245,400) Contribution margin $163,600 Fixed costs: Manufacturing expense$84,250 Selling expense8,000 Administrative expense10,000(102,250)Operating income $61,350

Solution:- Sales required = (Fixed Costs + Target Profit) / contribution…

Answered: If Cover-to-Cover Company wants to…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 51E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

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Target Profit

Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales.

1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
$

2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
$

Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8
Sales		$409,000
Variable costs:
Manufacturing expense	$245,400
Selling expense	20,450
Administrative expense	61,350	(327,200)
Contribution margin		$81,800
Fixed costs:
Manufacturing expense	$5,000
Selling expense	4,000
Administrative expense	11,450	(20,450)
Operating income		$61,350

Income Statement - Biblio Files

Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8
Sales		$409,000
Variable costs:
Manufacturing expense	$163,600
Selling expense	16,360
Administrative expense	65,440	(245,400)
Contribution margin		$163,600
Fixed costs:
Manufacturing expense	$84,250
Selling expense	8,000
Administrative expense	10,000	(102,250)
Operating income		$61,350

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If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? $ 2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?