Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $133,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: Tennis Walking Shoes Shoes $79 $87 Unit selling price Unit production costs: Direct materials $(14) $(19) Direct labor (5) (6) Variable factory overhead (3) (5) Fixed factory overhead (8) (9) Total unit production costs $(30) $(39) Unit variable selling expenses (25) (23) Unit fixed selling expenses (14) (9) Total unit costs $(69) $(71) Operating income per unit $10 $16 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 19,000 additional units of tennis shoes or 16,000 additional units of walking shoes could be sold without changing the unit selling price of either product. Required: 1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate costs. If required, use a minus sign to indicate a loss. Differential Analysis Promote Tennis Shoes (Alt. 1) or Promote Walking Shoes (Alt. 2) Line Item Description Revenues Costs: June 19 Promote Tennis Shoes Promote Walking Shoes Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Direct materials Direct labor Variable factory overhead Variable selling expenses Sales promotion Profit (loss) 1800Q Q 2. Determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). 3. The sales manager had tentatively decided to promote walking shoes, estimating that operating income would be increased by $123,000 ($16 operating income per unit for 16,000 units, less promotion expenses of $133,000). The manager also believed that the selection of tennis shoes would reduce operating income by, $57,000 ($10 operating income per unit for 19,000 units, less promotion expenses of $133,000). State briefly your reasons for supporting or opposing the tentative decision Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $133,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: Tennis Walking Shoes Shoes $79 $87 Unit selling price Unit production costs: Direct materials $(14) $(19) Direct labor (5) (6) Variable factory overhead (3) (5) Fixed factory overhead (8) (9) Total unit production costs $(30) $(39) Unit variable selling expenses (25) (23) Unit fixed selling expenses (14) (9) Total unit costs $(69) $(71) Operating income per unit $10 $16 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 19,000 additional units of tennis shoes or 16,000 additional units of walking shoes could be sold without changing the unit selling price of either product. Required: 1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate costs. If required, use a minus sign to indicate a loss. Differential Analysis Promote Tennis Shoes (Alt. 1) or Promote Walking Shoes (Alt. 2) Line Item Description Revenues Costs: June 19 Promote Tennis Shoes Promote Walking Shoes Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Direct materials Direct labor Variable factory overhead Variable selling expenses Sales promotion Profit (loss) 1800Q Q 2. Determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). 3. The sales manager had tentatively decided to promote walking shoes, estimating that operating income would be increased by $123,000 ($16 operating income per unit for 16,000 units, less promotion expenses of $133,000). The manager also believed that the selection of tennis shoes would reduce operating income by, $57,000 ($10 operating income per unit for 19,000 units, less promotion expenses of $133,000). State briefly your reasons for supporting or opposing the tentative decision
Expert Answer:
Related Book For
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Posted Date:
Students also viewed these accounting questions
-
Sole Mates Inc. is planning a one- month campaign for July to promote sales of one of its two shoe products. A total of $ 100,000 has been budgeted for advertising, contests, redeemable coupons, and...
-
Q1 How can a country's culture/customs impact business negotiations? Q2 Give four examples from the product life cycle of how/where you can save costs throughout the process
-
Differential Analysis for Sales Promotion Proposal Sole Mates Inc. is planning a one-month campaign for May to promote sales of one of its two shoe products. A total of $130,000 has been budgeted for...
-
Solar Energy Corp. has $4 million in earnings with four million shares outstanding. Investment bankers think the stock can justify a P/E ratio of 21. Assume the underwriting spread is 5 percent. What...
-
The monthly average variable costs, average total costs, and marginal costs for Alpacky, a typical alpaca wool manufacturing firm in Peru, are shown in Table 13P-3. All firms in the industry share...
-
Use the photon model to explain why ultraviolet radiation is harmful to your skin while visible light is not.
-
Which of the following statements is correct? a. A bridge is used to connect a LAN and a WAN. b. Packet switching combines the messages of multiple users into a "packet" for transmission. At the...
-
On September 1, 2013, Carolina Electronics Company has 1,000 Blu-ray players ready for sale. On October 1, 2013, 900 are sold at $125 each with a 1-year warranty. Carolina estimates that the warranty...
-
Find the area of the specified region. 7) Inside the circle r = 3 sin 0 and outside the cardioid r = 1 + cos 0
-
Aquatic Line Company (ALC) manufactures a variety of strong and durable ropes. The company manufactures all their products in a large factory located near Nephi, Utah. All the types of ropes the...
-
Use the doubling time formula to estimate how long it would take a population of 5 billion to double given an annual growth rate of 1.5 percent.
-
Derive the conversion factors for the following quantities for volume flow rate a) Converting in/min to mm/s. b) Converting gallons per minute (gpm) to m/s. c) Converting gpm to liters/min. d)...
-
What is the relationship between innovation and organizational agility, and how can organizations encourage innovative thinking while maintaining operational effectiveness ?
-
How do organizational learning mechanisms, such as single- and double-loop learning, facilitate adaptation to disruptive technological advancements and industry shifts in the era of digital...
-
Complete the tables by providing the missing value. Write your solutions on a separate sheet of paper. A. Markup and Margin No. Selling Price @DAALI 1. ThP 35,000 | Php 15.000. 50,000 23,000 2. 3. 4....
-
Statute in Minnesota on "unauthorized practice of law" 1. Who prosecutes this cases? 2. What does the statute identify as constituting unauthorized practice? 3. In the Matter of Jorissen, 391 N.W. 2d...
-
How do the principles of (a) Physical controls and (b) Documentation controls apply to cash disbursements?
-
When a team of people is able to achieve more than what its members could by working individually, this is called ____________. (a) distributed leadership (b) consensus (c) team viability (d) synergy
-
Which statement about self-managing teams is correct? (a) They can improve performance but not satisfaction. (b) They should have limited decision-making authority (c) They should operate without any...
-
Members of a team tend to become more motivated and better able to deal with conflict during the ____________ stage of team development. (a) forming (b) norming (c) performing (d) adjourning
Study smarter with the SolutionInn App