Submitted by: Jefferson Jarina and Chestine Jenn Sanap

WHITNEY COMPANY
Income Statement
For the Year Ended December 31

Total Per Unit (USD) Per Unit (USD) Per Unit (USD)
CF 2A 2B CF 2A 2B
Sales $ 450,000.00 $ 600,000.00 $ 720,000.00 $ 10.00 $ 8.00 $ 12.00
Less: Variable Costs
Direct Materials $ 90,000.00 $ 150,000.00 $ 120,000.00 $ 2.00 $ 2.00 $ 2.00
Direct Labor $ 78,300.00 $ 130,500.00 $ 104,400.00 $ 1.74 $ 1.74 $ 1.74
Variable Manufacturing Over Head $ 13,500.00 $ 22,500.00 $ 18,000.00 $ 0.30 $ 0.30 $ 0.30
Variable Shipping $ 5,400.00 $ 9,000.00 $ 7,200.00 $ 0.12 $ 0.12 $ 0.12
Variable Sales Commision $ 27,000.00 $ 45,000.00 $ 64,800.00 $ 0.60 $ 0.60 $ 1.08
Variable Administration $ 1,800.00 $ 3,000.00 $ 2,400.00 $ 0.04 $ 0.04 $ 0.04
Contribution Margin $ 234,000.00 $ 240,000.00 $ 403,200.00 $ 5.20 $ 3.20 $ 6.72
Less: Fixed Costs
Fixed Manufacturing Over Head $ 85,000.00 $ 85,000.00 $ 85,000.00 $ 1.89 $ 1.13 $ 1.42
Fixed Advertising $ 120,000.00 $ 120,000.00 $ 220,000.00 $ 2.67 $ 1.60 $ 3.67
Fixed Administrative $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 1.07 $ 0.64 $ 0.80
Net Income Loss/Profit $ -19,000.00 $ -13,000.00 $ 50,200.00 $ -0.42 $ -0.17 $ 0.84

1: Whitney's Income Statement (Contribution Format)

Total Per Unit (USD)
Sales $ 450,000.00 $ 10.00 $ 10.00
Less: Variable Costs $ -
Direct Materials $ 90,000.00 $ 2.00
Direct Labor $ 78,300.00 $ 1.74
Variable Manufacturing Over Head $ 13,500.00 $ 0.30
Variable Shipping $ 5,400.00 $ 0.12
Variable Sales Commision $ 27,000.00 $ 0.60
Variable Administration $ 1,800.00 $ 0.04 $ 4.10
Contribution Margin $ 234,000.00 $ 5.20
Less: Fixed Costs $ -
Fixed Manufacturing Over Head $ 85,000.00 $ 1.89
Fixed Advertising $ 120,000.00 $ 2.67
Fixed Administrative $ 48,000.00 $ 1.07 $ 253,000.00
Net Income Loss $ -19,000.00 $ -0.42

2A : Vice President Income Statement (Contribution Format)

Total Per Unit (USD)
Sales $ 600,000.00 $ 8.00
Less: Variable Costs
Direct Materials $ 150,000.00 $ 2.00
Direct Labor $ 130,500.00 $ 1.74
Variable Manufacturing Over Head $ 22,500.00 $ 0.30
Variable Shipping $ 9,000.00 $ 0.12
Variable Sales Commision $ 45,000.00 $ 0.60
Variable Administration $ 3,000.00 $ 0.04
Contribution Margin $ 240,000.00 $ 3.20
Less: Fixed Costs
Fixed Manufacturing Over Head $ 85,000.00 $ 1.13
Fixed Advertising $ 120,000.00 $ 1.60
Fixed Administrative $ 48,000.00 $ 0.64
Net Income Loss $ -13,000.00 $ -0.17

2B : Sales Manager Income Statement (Contribution Format)

Total Per Unit (USD)
Sales $ 720,000.00 $ 12.00
Less: Variable Costs
Direct Materials $ 120,000.00 $ 2.00
Direct Labor $ 104,400.00 $ 1.74
Variable Manufacturing Over Head $ 18,000.00 $ 0.30
Variable Shipping $ 7,200.00 $ 0.12
Variable Sales Commision $ 64,800.00 $ 1.08
Variable Administration $ 2,400.00 $ 0.04
Contribution Margin $ 403,200.00 $ 6.72
Less: Fixed Costs
Fixed Manufacturing Over Head $ 85,000.00 $ 1.42
Fixed Advertising $ 220,000.00 $ 3.67
Fixed Administrative $ 48,000.00 $ 0.80
Net Income Profit $ 50,200.00 $ 0.84
3. Total(Units) = Fixed Cost + Desired profit / (selling price - Variable cost/unit)
= (USD 253,000 + USD 30,200) / (USD 10 - USD 4.10)
= 48,000 units needed to be sold in order to generate USD 30,200 profit next year

Total Per Unit (USD)

Sales $ 480,000.00 $ 10.00
Less: Variable Costs
Direct Materials $ 62,400.00 $ 1.30
Direct Labor $ 83,520.00 $ 1.74
Variable Manufacturing Over Head $ 14,400.00 $ 0.30
Variable Shipping $ 5,760.00 $ 0.12
Variable Sales Commision $ 28,800.00 $ 0.60
Variable Administration $ 1,920.00 $ 0.04
Contribution Margin $ 283,200.00 $ 3.20
Less: Fixed Costs
Fixed Manufacturing Over Head $ 85,000.00
Fixed Advertising $ 120,000.00
Fixed Administrative $ 48,000.00
Net Income Profit $ 30,200.00

4: To determine total increase in Advertising Cost to earn 4.5% of sales from 60,000 units
Total Per Unit (USD)
Sales $ 600,000.00 $ 10.00
Less: Variable Costs
Direct Materials $ 120,000.00 $ 2.00
Direct Labor $ 104,400.00 $ 1.74
Variable Manufacturing Over Head $ 18,000.00 $ 0.30
Variable Shipping $ 7,200.00 $ 0.12
Variable Sales Commision $ 36,000.00 $ 0.60
Variable Administration $ 2,400.00 $ 0.04
Contribution Margin $ 312,000.00 $ 5.20
Less: Fixed Costs
Fixed Manufacturing Over Head $ 85,000.00
Fixed Advertising $ 152,000.00
Fixed Administrative $ 48,000.00
Net Income Profit $ 27,000.00

No 3 Fixed Advertising $ 120,000.00

Less No 4 Fixed Advertising $ 152,000.00
Total Advertising Allowable Increase $ 32,000.00

5. To determine special Order of 9,500 units from an overseas distributor unit price:

Total Per Unit (USD)

Sales $ 88,445.00 $ 9.31
Less: Variable Costs
Direct Materials $ 19,000.00 $ 2.00
Direct Labor $ 16,530.00 $ 1.74
Variable Manufacturing Over Head $ 2,850.00 $ 0.30
Variable Shipping $ 1,710.00 $ 0.18
Variable Sales Commision $ - $ -
Variable Administration $ 285.00 $ 0.03 $ 40,375.00
Contribution Margin $ 48,070.00
Less: Fixed Costs
Fixed Insurance $ 5,700.00 $ -
Fixed Manufacturing Over Head $ 17,955.00 $ 1.89
Fixed Advertising $ - $ -
Fixed Administrative $ 10,165.00 $ 1.07 $ 33,820.00
Net Income Profit $ 14,250.00