Last year Bidwell company had the following data for its only product, Product SD: ...
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Accounting
Last year Bidwell company had the following data for its only product, Product SD:
Fixed Variable
Sales (100,000) $1,000,000
Expenses:
Direct Materials $300,000
Direct Labor 200,000
Manufacturing Overhead $100,000 150,000
Selling and Administrative 110,000 50,000
Total Expenses 210,000 700,000 910,000
Net Operating Income $90,000
The company produced and sold 100,000 units during the year and had no beginning or ending inventories. Suppose management believes that a $15,000 increase in annual advertising expense will result in a considerable increase in sales.
1. Based on last years data, how much would sales revenue have to increase for the company to be economically indifferent between doing the advertising campaign and not doing the advertising campaign?
2. Based on last years data, the number of units of Product SD that Bidwell must sell to breakeven in the coming year is:
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