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Margarita [4]
3 years ago
5

In 2020, the Merkel Company had revenues of $2,600,000 and costs of $2,100,000. During 2021, Merkel will be introducing a new pr

oduct line that is expected to increase sales revenue by $260,000 and costs by $172,000. Assuming no changes are expected for the other products, the operating profits are expected to increase by: Multiple Choice a. $588,000. b. $260,000. c. $172,000. d. $88,000.
Business
1 answer:
Artemon [7]3 years ago
4 0

Answer:

d. $88,000

Explanation:

In 2020, Merkel company's

Revenue = $2,600,000

Cost = $2,100,000

Operating profits = Revenue -  Cost

= $2,600,000 - $2,100,000

= $500,000

In 2021, the company's;

Revenue increases by $260,000

New revenue = $260,000 + $2,600,000 = $2,860,000

New Cost = $2,100,000 + $172,000 = $2,272,000

New Operating profits = $2,860,000 - $2,272,000

= $588,000

Expected increase in Operating profits = $588,000 - $500,000

= $88,000

The expected increase in operating profit amounts to $88,000.

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JOURNAL    

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DATE PARTICULARS     INVOICE DATE DR. CR.

Jul-01 PURCHASE A/C     Jul-01  6,000  

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2/10,N/60    

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   INVENTORY        500

Jul-03 CARRIAGE INWARDS A/C   Jul-01  125  

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Jul-08 CASH A/C       1,700  

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                                        INVENTORY     1,300

Jul-09 PURCHASE A/C     Jul-09  2,200  

                                        PAYABLE A/C {LEIGHT CO.}   2,200

2/15,N/60    

Jul-11 PAYABLE A/C {LEIGHT CO.}   Jul-09  200  

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hi buddy

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