Answer to Question #126293 in Other for ,kmjhgcfx

Question

Sales (150000 units @ $30) $4,500,000
Cost of Goods Sold:
Materials $1,050,000
Labour 1,500,000
Variable FOH 450,000
Fixed FOH 500,000 3,500,000
Gross Profit $1,000,000
Variable Marketing Expenses $ 135,000
Fixed Marketing Expenses 185,000
Fixed Administrative Expenses 180,000 500,000
Income before Tax $ 500,000
Income Tax 250,000
Net Inco me $ 250,000

Woodstock is preparing its budget for the coming year and has made the following predictions about cost increases: material 5%, labour
8%, all other costs including fixed 6%. Productive capacity is 200,000 units.
The president has been offered various proposals by the division managers as follows:
• Maintain the present volume and sales price
• Produce and sell at capacity and reduce the unit price $28.
• Raise the unit price to $32, spend an extra # 300,000 on advertising, and produce and sell 180,000 un its.

Required:
Recommended action, based on quantification of alternatives.

Answer 1

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