CLICK HERE TO REVIEW LEARNING OBJECTIVES QUESTION 1 Not complete Points out of 1
ID: 2518248 • Letter: C
Question
CLICK HERE TO REVIEW LEARNING OBJECTIVES QUESTION 1 Not complete Points out of 1.00 Analyzing Operational Changes Flag question Operating results for department B of Delta Company during 2016 are as follows: Sales Cost of goods sold 378,000 Gross profit Direct expenses Common expenses 0 Total expenses Net loss $540,000 162,000 120,000 66,000 186,000 s(24,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $45,000, what would be the effect on the departments net income or net loss? (gnore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 15%, the effect on net income (loss) would be $ CheckExplanation / Answer
Department B
Effect on net income = Increase by 36,000
Sales [540,000+(540,000*15%)] 621,000 Cost of goods sold 378,000 Gross profit 243,000 Direct expenses [120,000+45,000] 165,000 Common expenses 66,000 Total expenses 231,000 Net income 12,000