Use the Following Information to Answer Questions 1, 2 and 3. Johnson Company is a...
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Accounting
Use the Following Information to Answer Questions 1, 2 and 3.
Johnson Company is a merchandising firm. Next month the company expects to sell 650 units. The following data describe the company's revenue and cost structure:
Selling price per unit ... $50
Sales commission ............. 7%
Purchase price (cost) per unit $16
Advertising expense .......... $5,000 per month
Administrative expense ... $3,500 per month plus 12% of sales
Transportation out (freight) $3 per unit
Marketing expenses $2,500 per month
Assume that all activity mentioned in this problem is within the relevant range of 500 to 700 units.
1. The expected contribution margin next month is:
2. The expected gross margin (profit) is:
3. The expected net income next month is: (use the contribution approach to calculate net income):
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