Should the advertising budget be increased

Assignment Help Accounting Basics
Reference no: EM133168156

Question - John Jay Company is selling a hardware product with a contribution margin of 40 percent on sales of $500,000 per year (50,000 units at $10). The fixed costs are $80,000 per year.

a) How much increase in net income is expected in the coming year if sales increase by 10,000 units?

b) How much increase in net income is expected in the coming year if sales are increased by $70,000?

c) The sales manager feels that a $20,000 increase in the yearly advertising budget would Increase annual sales by $60,000. Should the advertising budget be increased?

d) The sales manager suggests cutting the present selling price by 10 percent and increasing the advertising budget by $25,000. If these two decisions are made, it is projected that unit Sales will go up by 40 percent. Should this policy be approved?

Reference no: EM133168156

Questions Cloud

What total cost of the new investment should be recorded : The share is quoted right-on at 125. What total cost of the new investment should be recorded if all of the stock rights are exercised by the investor
Define the term audit sampling : Define the term "audit sampling" without using the words "audit" or "sample". What underlying assumption doauditors make
Evaluate procurement requirements to formulate procurement : Critically evaluate the risks associated with contract and procurement management approaches and Evaluate procurement requirements to formulate procurement
Determine the proceeds of the note : On January 26, Nova Co. borrowed cash from Conrad Bank by issuing a 30-day note with a face amount of $76,800. Determine the proceeds of the note
Should the advertising budget be increased : The sales manager feels that $20,000 increase in yearly advertising budget would Increase annual sales by $60,000. Should the advertising budget be increased
How much money can you spend on labour : If your target labour cost percentage is 17%, how much money can you spend on labour that day and meet your labour budget? Please show all calculations
How much is the total net income to be reported on december : Paul signed a non-interest-bearing note for the balance. How much is the total net income to be reported on December 31, 2020
Discuss how financial and managerial accounting interface : Discuss how financial and managerial accounting interface. Is one more important than another? Discuss the rationale for your answer
Reply to post encapsulation : how long did it take and how did he know that God would help him accomplish this task

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd