The president believes it would be a mistake to change the unit selling price. Instead, he wants to use less costly raw materials, thereby reducing unit cost by 70 cents. How many units would have to be sold next year to earn target profit of $30,200?
The president believes it would be a mistake to change the unit selling price. Instead, he wants to use less costly raw materials, thereby reducing unit cost by 70 cents. How many units would have to be sold next year to earn target profit of $30,200?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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The president believes it would be a mistake to change the unit selling price. Instead, he wants to use less costly raw materials, thereby reducing unit cost by 70 cents. How many units would have to be sold next year to earn target profit of $30,200?
![WHITNEY COMPANY
Income Statement
For the Year Ended December 31
Sales (45,000 units at $10 per unit) .
Less cost of goods sold:
$450,000
Direct materials
$90,000
Direct labor .
78,300
98,500
Manufacturing overhead
266,800
Gross margin ....
Less operating expenses:
Selling expenses:
183,200
Variable:
Sales commissions
$27,000
Shipping
5,400
32,400
Fixed (advertising, salaries)
120,000
Administrative:
Variable (billing and other)
Fixed (salaries and other)
1,800
48,000
202,200
Net operating loss
$ (19,000)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9c6399d-cffd-4d81-a593-aff55137d5ac%2F7bf9e10a-6690-47d0-93a2-7f1b98e49c94%2Fjsqbcse_processed.jpeg&w=3840&q=75)
Transcribed Image Text:WHITNEY COMPANY
Income Statement
For the Year Ended December 31
Sales (45,000 units at $10 per unit) .
Less cost of goods sold:
$450,000
Direct materials
$90,000
Direct labor .
78,300
98,500
Manufacturing overhead
266,800
Gross margin ....
Less operating expenses:
Selling expenses:
183,200
Variable:
Sales commissions
$27,000
Shipping
5,400
32,400
Fixed (advertising, salaries)
120,000
Administrative:
Variable (billing and other)
Fixed (salaries and other)
1,800
48,000
202,200
Net operating loss
$ (19,000)
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