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The condensed income statement of Western Limited (WL) for 2019 is shown below:
Western Limited
Income Statement for the Year Ended December 31, 2019
Sales - 240,000 units $1,200,000COGS 800.000Gross profit 400,000Selling expenses (280,000)Administrative expenses (150,000)Loss (30,0001
Cost data has revealed that 75% of the COGS is variable, 42% of the selling expenses are variable and 40% of the administrative expenses are variable.
Two approaches to increasing the bottom line have been received. One from the Production Manager and one from the Marketing Manager.
Production Manager
Marketing Manager
Required
Problem 1: Which approach should WL implement? Show your calculations and explain your answer.
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