CVP and Financial Statements for a Mega-Brand Company Procter Gamble Company is a Cincinnati-based company that produces household products under

CVP and Financial Statements for a Mega-Brand Company Procter & Gamble Company is a Cincinnati-based company that produces household products underbrand names such as Gillette, Bounty, Crest, Folgers, and Tide. The companyâ??s 2006 income statement showed the following (in millions):Net sales $68,222Costs of products sold 33,125Selling, general, and administrative expense 21,848Operating income $13,249Suppose that the cost of products sold is the only variable cost; selling, general, and administrative expenses are fixed with respect to sales. Assume that Procter & Gamble had a 10% increase in sales in 2007 and that there was no change in costs except for increases associated with the higher volume of sales. Compute the predicted 2007operating income for Procter & Gamble and its percentage increase. Explain why the percentage increase in income differs from the percentage increase in sales.

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