Your personality is:

the way you usually think

the way you usually act

both of these

neither of these

The gomez company, a merchandising firm, has budgeted its activity for december according to the following information: • sales at $500,000, all for cash. • merchandise inventory on november 30 was $250,000. • the cash balance at december 1 was $20,000. • selling and administrative expenses are budgeted at $50,000 for december and are paid for in cash. • budgeted depreciation for december is $30,000. • the planned merchandise inventory on december 31 is $260,000. • the cost of goods sold represents 75% of the selling price. • all purchases are paid for in cash. the budgeted cash disbursements for december are:

Depreciation on the company's equipment for 2017 is computed to be $18,000.the prepaid insurance account had a $6,000 debit balance at december 31, 2017, before adjusting for the costs of any expired coverage. an analysis of the company's insurance policies showed that $1,100 of unexpired insurance coverage remains. the office supplies account had a $700 debit balance on december 31, 2016; and $3,480 of office supplies were purchased during the year. the december 31, 2017, physical count showed $300 of supplies available. two-thirds of the work related to $15,000 of cash received in advance was performed this period. the prepaid insurance account had a $6,800 debit balance at december 31, 2017, before adjusting for the costs of any expired coverage. an analysis of insurance policies showed that $5,800 of coverage had expired. wage expenses of $3,200 have been incurred but are not paid as of december 31, 2017.

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?