Develop a profit-and-loss statement for the Westgate division of North Industries. This
division manufactures light fixtures sold to consumers through home-improvement
and hardware stores. Cost of goods sold represents 40% of net sales. Marketing expenses include selling expenses, promotion expenses, and freight. Selling expenses
include sales salaries totaling $3 million per year and sales commissions (5% of sales).
The company spent $3 million on advertising last year, and freight costs were 10% of
sales. Other costs include $2 million for managerial salaries and expenses for the marketing function and another $3 million for indirect overhead allocated to the division.
a. Develop the profit-and-loss statement if net sales were $20 million last year.
b. Develop the profit-and-loss statement if net sales were $40 million last year.
c. Calculate Westgate’s break-even sales.
