Reference no: EM133061703

Question - The Snazzy Pup Company makes many items and one of them is a special dog collar. The following information pertains to the product:

ORIGINAL DATA

Collars

Sales in units 45,000

Per item:

Sales price $16.00

Product Costs:

Materials $4.00

Labor $2.00

Factory Overhead $1.00

Total Cost $7.00

In total:

Selling costs $160,000

Administrative costs $110,000

REQUIRED - On the basis of the facts as given above, prepare the following schedules using a spreadsheet software package (preferably Excel). Each situation is independent of the others.

A. Prepare the income statement using the original data.

B. Snazzy Pup is thinking of adding more sales people. This will double the selling costs. Assume they can double the number of items sold with this change. Prepare a new income statement showing these changes.

C. Snazzy Pup is wondering what would happen if they only sell half as many items. Assume selling and administrative costs stay the same. Prepare a new income statement showing these changes.

D. Snazzy Pup is considering cutting sales prices to $14.00 per collar in hopes of doubling sales. Assume selling and administrative costs stay the same. Prepare a new income statement showing these changes.