The current monthly income statement for LLT, Inc., represents the results of se

Question

The current monthly income statement for LLT, Inc., represents the results of selling 6,000 coffee mugs Sales (revenue) Cost of goods sold Gross margin S & A expenses ncome before taxes Income taxes (@ 40%) Net income $42,000 (22,500) 19,500 (15,000) 4,500 -(1,800) $ 2,700 Cost of goods sold included fixed manufacturing costs of $4,500 and selling and administrative expenses (S & A) included $6,000 of fixed costs. Sales commissions amounting to $0.50 per coffee mug were also included in S & A expenses. Hint: "Net income" is after income taxes

Explanation / Answer

2) initial sales commission is 0.50 per unit

Thus cost=0.5*1500=750

we know total revenue=Price*Quantity=1500*5=7500

And total cost for 1500 is equal to 1500*0.3+900=450+900=1350

Thus there is addition in income=7500-1350=6150 if they accept the offer

But there is a net loss of 1350-750=600

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