Prepare for next year advertising campaign

Assignment Help Financial Accounting

Reference no: EM133372237

Question: the arntrecht sleep company sells continental quilts and has experienced a steady growth in sales for the past five years. however, increased competition has led mr haag, the chairman, to believe that an aggressive advertising campaign will be necessary next year to maintain the company's present growth.

to prepare for next year's advertising campaign, the company's accountant has prepared and presented mr haag with the following data for the current year 20x1:

variable costs (per unit) £

variable costs (per unit)	£
direct labour	8.00
direct materials	3.25
variable overheads	2.50
total variable costs	13.75

fixed costs
manufacturing	15,000
selling	40,000
administration	70,000
total fixed costs	£135,000

selling price per unit	25.00

sales, 20x1
(20,000 units)	500,000

mr haag has set the sales target for 20x2 at a level of £550,000 (or 22,000 quilts). he also believes that additional selling expenses of £11,250 for advertising in 20x2 (all other costs remaining constant) will be necessary to attain the sales target.

Question: Projected net profit for 20x2

Reference no: EM133372237

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