*I NEED HELP WITH QUESTIONS 6-10 ON ALTERNATIVE #2. I HAVE SOME ANSWERS BUT NOT
ID: 2454386 • Letter: #
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*I NEED HELP WITH QUESTIONS 6-10 ON ALTERNATIVE #2. I HAVE SOME ANSWERS BUT NOT SURE IF THEY ARE CORRECT AND WOULD LIKE TO SEE SOMEONE'S WORK TO COMPARE ANSWERS. THIS IS ALL THE INFORMATION I WAS GIVEN AND ONLY NEED HELP WITH 6-10 AND HOW TO GET THE ANSWERS, PLEASE AND THANK YOU!
INFORMATION SHEET #2 -->
In order to increase awareness for its unique and adorable product, the company is
Koala Kare Bears INFORMATION SHEET 1--> Brother and sister, Carl and Carla Misney, decided to start their own business to to manufacture stuffed animals for children. Carl is the creative force behind the designs and Carla is the supply chain management guru. Together they created a new company called Koala Kare Bears. In the first year of operations the company sold 50,000 units of its products. Below is presented the company's sales and cost information. Sales $800,000 Variable costs 100,000 Contribution margin 700,000 Fixed costs 560,000 Income before taxes 140,000 Income taxes (32% rate) 44,800 Net income $95,200 The management duo know that another challenging and competitive year lies ahead of them. Now entering their second year of operations, they are considering two alternatives and have hired your group to help them make some important business decisions.INFORMATION SHEET #2 -->
Alternative #2In order to increase awareness for its unique and adorable product, the company is
considering a national advertising campaign. This campaign would increase fixed costs for the company by $150,000. This alternative is exclusive of alternative 1 -use the existing product line and its financial information to calculate the effects of the advertising campaign. Existing Product Line Sales $800,000 Variable costs 100,000 Contribution margin 700,000 Fixed costs 560,000 Income before taxes 140,000 Income taxes (32% rate) 44,800 Net income $95,200 Required 1) Compute the company's new contribution margin per unit under the 2nd alternative. 2) Compute the company's new contribution margin ratio. 3) Compute the company's new break-even point in sales dollars. 4) Compute the operating leverage for each product line. What does this figure mean? Why is it important to management? 5) If the company wishes the product line to generate net income of $200,000, how many units will need to be sold? 6) Assume that the company expects sales of the product to decline to 33,000 units next year with no change in unit sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement (assume 32% tax rate, and that any loss before taxes yields a 32% tax savings). 7) Assume that the company expects sales of its product to increase to 64,000 units next year with no change in sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement (assume 32% tax rate, and that any loss before taxes yields a 32% tax savings). 8) Why might now be a good time for the company to consider a large-scale advertising campaign? Why might now not be a good time for the company to consider a large- scale advertising campaign? 9) What are some benefits of advertising that cannot be financially measured? 10) Can you provide the company some examples of a time when a new company has launched a large advertising campaign and it is helped them? How about some examples of a new company that launched a large advertising campaign and it impacted them negatively?Explanation / Answer
*I NEED HELP WITH QUESTIONS 6-10 ON ALTERNATIVE #2. I HAVE SOME ANSWERS BUT NOT
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