Golden Star Winery produces midlevel wines consumed primarily in North America.

Question

Golden Star Winery produces midlevel wines consumed primarily in North America. Given below is the projected income statement for the company for 2011.

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Projected Income Statement (2011) Sales (100,000 cases at $7 per case) $700,000 Cost of goods sold: Materials $180,000 Labor $225,000 Fixed manufacturing expenses $45,000 Administrative and selling expenses: Delivery $30,000 Commissions $50,000 Advertising $10,000 Travel $5,000 Fixed administrative and selling expenses $15,000 Total expenses $560,000 Net income before taxes $140,000

Explanation / Answer

S.P 7 8 7.75 7.5 7.25 7 6.75 6.5 Units 100000 65000 75000 80000 90000 100000 115000 120000 Sales 700000 520000 581250 600000 652500 700000 776250 780000 Mat. 180000 117000 135000 144000 162000 180000 207000 216000 Labor 225000 146250 168750 180000 202500 225000 258750 270000 Fixed. 45000 45000 45000 45000 45000 45000 45000 45000 Adm. delivery 30000 19500 12675 8238.75 5355.1875 3480.8719 2262.567 1470.668 Comm. 50000 32500 21125 13731.25 8925.3125 5801.4531 3770.945 2451.114 Advertising 10000 6500 4225 2746.25 1785.0625 1160.2906 754.1889 490.2228 Travel 5000 3250 2112.5 1373.125 892.53125 580.14531 377.0945 245.1114 Fixed admin. 15000 15000 15000 15000 15000 15000 15000 15000 Net Income 140000 135000 177362.5 189910.63 211041.91 223977.24 243335.2 229342.9

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