1. Cost Behavior, CVP, Relevant Cost BigLittle Company is a retailer. It is currently operating with...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. Cost Behavior, CVP, Relevant Cost BigLittle Company is a retailer. It is currently operating with one large retailer and planning to open new locations. The expected monthly operating costs for different sales in unit are as follows. Total Operating Cost $1,420 1,530 1,820 Sales in Units 500 550 700 Size of Retailer Small Small Small Total Operating Cost $8,650 8,750 9,700 Sales in Units 3,050 3,140 4,100 Size of Retailer Large Large Large The company has two types of retail locations: small and large. The large locations can reach more customers in the region by supporting pick-up and delivery services. The rental and other operating costs of the small locations are much less than those of large locations. Large and small locations have different contribution margin per unit. Required: 1) The company wants to set the price to break-even at 700 units for a small retailer location. Calculate the desired price for the small retailer (round your answer to two decimal places). 2) For the price set for a smaller retailer location. How much is the expected profit for a large retail location with sales of 3,500 units? 3) A customer who would like to purchase products in bulk contacted the large retail location, and the customer would like to purchase 1,000 units for a unit price of 2. The special order requires 900 dollars of additional shipping and handling costs. Should the company take the order? The company has enough capacity to handle the special order at a large retail location. 4) The company is expecting to have 7,000 units of sales per month from the region and wants to maximize the profit. Currently, the company is operating with one large retail location. They are considering two options: (1) opening five additional small retailer locations and (2) opening one additional large retail location. Which option should the company choose if it wants to meet the demand while maximizing the operating profit? 5) The sales forecast division expects that the sales are likely to decrease severely in the next year. Given the downward trend of demand, which option between (1) opening five additional small retailer locations and (2) opening one additional large retail location is a choice to minimize the business risk of making a loss? 6) Due to the downward shift of demand, the company expects the total demand to be 4,200 units per month and decided to open one additional small retailer. The company expects the small and the large locations to generate 700 and 3,500 units of sales, respectively. The company also wants to set a competitive price just enough to give them $500 of monthly profit. How much should be the company's target price for the region (round your answer to two decimal places)? 2 1. Cost Behavior, CVP, Relevant Cost BigLittle Company is a retailer. It is currently operating with one large retailer and planning to open new locations. The expected monthly operating costs for different sales in unit are as follows. Total Operating Cost $1,420 1,530 1,820 Sales in Units 500 550 700 Size of Retailer Small Small Small Total Operating Cost $8,650 8,750 9,700 Sales in Units 3,050 3,140 4,100 Size of Retailer Large Large Large The company has two types of retail locations: small and large. The large locations can reach more customers in the region by supporting pick-up and delivery services. The rental and other operating costs of the small locations are much less than those of large locations. Large and small locations have different contribution margin per unit. Required: 1) The company wants to set the price to break-even at 700 units for a small retailer location. Calculate the desired price for the small retailer (round your answer to two decimal places). 2) For the price set for a smaller retailer location. How much is the expected profit for a large retail location with sales of 3,500 units? 3) A customer who would like to purchase products in bulk contacted the large retail location, and the customer would like to purchase 1,000 units for a unit price of 2. The special order requires 900 dollars of additional shipping and handling costs. Should the company take the order? The company has enough capacity to handle the special order at a large retail location. 4) The company is expecting to have 7,000 units of sales per month from the region and wants to maximize the profit. Currently, the company is operating with one large retail location. They are considering two options: (1) opening five additional small retailer locations and (2) opening one additional large retail location. Which option should the company choose if it wants to meet the demand while maximizing the operating profit? 5) The sales forecast division expects that the sales are likely to decrease severely in the next year. Given the downward trend of demand, which option between (1) opening five additional small retailer locations and (2) opening one additional large retail location is a choice to minimize the business risk of making a loss? 6) Due to the downward shift of demand, the company expects the total demand to be 4,200 units per month and decided to open one additional small retailer. The company expects the small and the large locations to generate 700 and 3,500 units of sales, respectively. The company also wants to set a competitive price just enough to give them $500 of monthly profit. How much should be the company's target price for the region (round your answer to two decimal places)? 2
Expert Answer:
Answer rating: 100% (QA)
Part1 Calculation of selling price Calculation of varia... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Solve 3 x = 12. Round your answer to two decimal places
-
Albertson Furniture Company is a retailer of home furnishings. It currently has stores in three cities' San Francisco, Los Angeles, and Phoenix. Operating data for the three stores in 2012 were as...
-
Consider a market with one large firm and many small firms. The supply curve of the small firms taken together is S(p) = 100 + p. The demand curve for the product is D(p) = 200 p. The cost function...
-
In Exercises find the given higher-order derivative. 2 "(x) = 2 / f(x) X
-
The number of transistors (in millions) made at a plant in Japan during the past 5 years follows: Year Transistors 1 ............ 140 2 ............ 160 3 ............ 190 4 ............ 200 5...
-
Explain why the homogeneous Neumann boundary value problem for a Sturm-Liouville operator with q(x) > 0 is positive definite. What is the minimization principle?
-
Eden Development Company has two competing investments. Proposal A and Proposal B. Proposals A and B have an initial investment of $175,000. The net cash flows estimated for the two investments are...
-
Canton Corporation is a privately owned firm that engages in the production and sale of industrial chemicals, primarily in North America. The firms primary product line consists of organic solvents...
-
GB519 Excel Track Module 3 - Part 5- Mastery Question 2 of 2 Thome and Crede, CPAs, are preparing their service revenue (sales) budget for the coming year (2020). The practice is divided into three...
-
Barrow Distributors packages and distributes industrial supplies. A standard shipment can be packaged in a Class A container, a Class K container, or a Class T container. A single Class A container...
-
Worldwide Chemical Co. consists of three production departments and four service departments. For the purpose of creating factory overhead rates, the accountant prepared the cost distribution sheet,...
-
The adjusted trial balance of the Ricci and Napoli Partnership for the year ended December 31, 2020, appears below: RICCI AND NAPOLI PARTNERSHIP Adjusted Trial Balance December 31, 2020 Debit Credit...
-
Compare and contrast internal and external validity. Describe and give examples of research questions for which external validity is a primary concern. Describe and give examples of research...
-
Modern reproductive technology raises a number of difficult ethical issues in such areas as in vitro fertilization, genetic counseling, prenatal testing for developmental defects, abortion, prenatal...
-
How does the motif of dreams and visions in magical realism contribute to the exploration of themes surrounding reality and the subconscious? Analyze how these motifs bridge the gap between the...
-
Expo Company prepared the following adjusting entries at year - end on December 3 1 , 2 0 2 7 . A interest expense debit 3 0 0 interest payable. Credit 3 0 0 beat unknown revenue unearned. Service...
-
5 Analyse the current internal environment of your organisation. 5.1 What are the barriers and threats to change in your organisation? 5.2 What are your organisation's strengths that will contribute...
-
Suppose a population of bacteria doubles every hour, but that 1.0 x 106 individuals are removed before reproduction to be converted into valuable biological by-products. Suppose the population begins...
-
Who is more likely to start a business: someone who is unemployed, working full time, or working part time?
-
Are there any small wins in how Albert Black has developed and managed his business?
-
What are the critical success factors for successfully running a cheese business? What skills and abilities and resources do the new owners bring to this business? What critical success factors dont...
-
Using your analysis from P11-8B, prepare the Stockholders' Equity section of the Zhou Corporation's balance sheet. Problem P11-8B The stockholders' equity of Zhou Corporation at January 1 follows:...
-
The stockholders' equity section of Light Corporation's balance sheet at January 1 follows: The following transactions affecting stockholders' equity occurred during the year: Jan. 8 Issued 30,000...
-
The following T-accounts contain keyed entries representing five transactions involving the stockholders' equity of Meadow, Inc.: Required Using this information, give detailed descriptions,...
Study smarter with the SolutionInn App