Question

The marketing manager believes that increasing advertising costs by $74,000 in 2020 will increase the company’s sales volume to 12,700 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional advertising costs.

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

The marketing manager believes that increasing advertising costs by $74,000 in 2020 will increase the company’s sales volume to 12,700 units.

We weren't provided with enough information to solve the requirement. But, I will provide the general structure:

Sales= (number of units*selling price per unit)=

Total variable cost= (total variable cost per unit*number of units)=

Contribution margin=

Fixed costs= (fixed costs + incremental fixed costs)=

Net operating income

If we want to determine the effect on income without an income statement:

Effect of income= incremental units*contribution margin - incremental fixed costs

Contribution margin= selling price - unitary variable cost