Question

In: Accounting

The condensed income statement for the Blossom and Paul partnership for 2020 is as follows. Sales...

The condensed income statement for the Blossom and Paul partnership for 2020 is as follows.

Sales (240,000 units) $1,200,000
Cost of goods sold 800,000
Gross profit 400,000
Operating expenses
Selling $280,000
Administrative 156,000
436,000
Net loss $(36,000 )

A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable.

1) Compute the break-even point in total sales dollars for 2020.

2) Blossom has proposed a plan to get the partnership “out of the red” and improve its profitability. She feels that the quality of the product could be substantially improved by spending $0.30 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Blossom estimates that sales volume will increase by 25%. Compute the net income under Blossom's proposal and the break-even point in dollars

3) Paul was a marketing major in college. He believes that sales volume can be increased only by intensive advertising and promotional campaigns. He therefore proposed the following plan as an alternative to Blossom’s: (1) increase variable selling expenses to $0.59 per unit, (2) lower the selling price per unit by $0.23, and (3) increase fixed selling expenses by $40,000. Paul quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. Compute the net income under Paul’s proposal and the break-even point in dollars.

Solutions

Expert Solution

Answer with working is given below


Related Solutions

The condensed income statement for the Blossom and Paul partnership for 2020 is as follows. Sales...
The condensed income statement for the Blossom and Paul partnership for 2020 is as follows. Sales (240,000 units) $1,200,000 Cost of goods sold 800,000 Gross profit 400,000 Operating expenses Selling $280,000 Administrative 156,000 436,000 Net loss $(36,000 ) A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable. 1) Compute the break-even point in total sales dollars for 2020. 2)...
The condensed income statement for the Blossom and Paul partnership for 2020 is as follows. Blossom...
The condensed income statement for the Blossom and Paul partnership for 2020 is as follows. Blossom and Paul Company Income Statement For the Year Ended December 31, 2020 Sales (270,000 units) $1,350,000 Cost of goods sold 864,000 Gross profit 486,000 Operating expenses Selling $315,000 Administrative 175,500 490,500 Net loss $(4,500 ) A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are...
The condensed income statement for the Oriole and Paul partnership for 2020 is as follows. Oriole...
The condensed income statement for the Oriole and Paul partnership for 2020 is as follows. Oriole and Paul Company Income Statement For the Year Ended December 31, 2020 Sales (300,000 units) $1,500,000 Cost of goods sold 960,000 Gross profit 540,000 Operating expenses Selling $350,000 Administrative 232,500 582,500 Net loss $(42,500 ) A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are...
The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI...
The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI AND PAUL COMPANY Income Statement For the Year Ended December 31, 2017 Sales (240,000 units) $1,200,000 Cost of goods sold 800,000 Gross profit 400,000 Operating expenses Selling $280,000 Administrative 150,000 430,000 Net loss $(30,000 ) A cost behavior analysis indicates that 65% of the cost of goods sold are variable, 45% of the selling expenses are variable, and 44% of the administrative expenses are...
The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI...
The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI AND PAUL COMPANY Income Statement For the Year Ended December 31, 2017 Sales (240,000 units) $1,200,000 Cost of goods sold 800,000 Gross profit 400,000 Operating expenses Selling $280,000 Administrative 150,000 430,000 Net loss $(30,000 ) A cost behavior analysis indicates that 65% of the cost of goods sold are variable, 45% of the selling expenses are variable, and 44% of the administrative expenses are...
The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI...
The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI AND PAUL COMPANY Income Statement For the Year Ended December 31, 2017 Sales (240,000 units)                                                      $1,200,000           Cost of goods sold                                                            800,000                 Gross profit                                                        400,000                 Operating expenses                                                                       Selling                   $280,000                                              Administrative                  150,000                                                 430,000                 Net loss                                                $(30,000               ) A cost behavior analysis indicates that 70% of the cost of goods sold are variable, 43% of the selling expenses are variable, and 39% of the administrative expenses are...
The condensed budgeted income statement for the Phan and Nguyen partnership for 2020 is as follows:...
The condensed budgeted income statement for the Phan and Nguyen partnership for 2020 is as follows: PHAN AND NGUYEN LLP Income Statement Year Ending December 31, 2020 Sales (240,000 units) $1,200,000 Cost of goods sold 800,000 Gross profit 400,000 Operating expenses Selling $280,000 Administrative 150,000 430,000 Net loss $(30,000) A cost behaviour analysis indicates that 75% of the cost of goods sold is variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable. (Use...
The condensed income statement for the Terri and Jerri partnership for 2010 is as follows. TERRI...
The condensed income statement for the Terri and Jerri partnership for 2010 is as follows. TERRI AND JERRI COMPANY Income Statement For the Year Ended December 31, 2010 Sales (200,000 units) Cost of goods sold Gross Profit Operating expenses Selling Administrative Net Loss $280,000 160,000 $1,200,000 800,000 400,000 440,000 ($40,000) A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 50% of the selling expenses are variable, and 25% of the administrative expenses are variable....
Problem 2-6A Condensed balance sheet and income statement data for Blossom Company are presented as follows....
Problem 2-6A Condensed balance sheet and income statement data for Blossom Company are presented as follows. Blossom Company Balance Sheets December 31 Assets 2017 and 2016 (respectively) Cash $ 30,700 $ 22,700 Receivables (net) 82,100 74,100 Other current assets 102,100 85,100 Long-term investments 62,000 60,000 Property, plant, and equipment (net) 522,100 482,100 Total assets $ 799,000 724,000 Liabilities and Stockholders’ Equity Current liabilities $ 77,700 $ 72,700 Long-term liabilities 92,100 102,100 Common stock 342,100 312,100 Retained earnings 287,100 237,100 Total...
1) The condensed income statement for a business for the past year is presented as follows:
    1) The condensed income statement for a business for the past year is presented as follows:     Product   F G H Total Sales $200,000 $180,000 $320,000 $700,000 Less variable costs 120,000 160,000 200,000 480,000 Contribution margin $ 80,000 $ 20,000 $120,000 $220,00 Less fixed costs     25,000    30,000    40,000     95,000 Income (Loss) from Operations 55,000 10,000 80,000 125,000 Management is considering the discontinuance of the manufacture and sale of Product G at the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT