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6 7 8 9 10 11 12 13 14 15. 16 17 18 19 20 21 22 23 24 25 26 27 10 11 12 13 14 15 16 17 18 19 20 28 Manufacturing Costs for rattles (based on production volume of 100,000 units): 29 30 31 32 33 Packaging 34 Variable Manufacturing Overhead 35 Fixed Manufacturing Overhead 36 37 Selling and Administrative Costs for rattles (based on sales volume of 100,000 units): 38 39 40 Sales Commissions 41 Shipping Costs 42 Advertising and Promotion (fixed) 43 Fixed Selling and Admin Expenses 44 24 26 35 36 37 38 39 40 41 Child's Play Company Child's Play Company makes a plastic rattle for toddlers. The rattle is generally marketed through exclusive retailers located in upscale shopping malls. In late 2023, Diana Suarez, the president of the company, was considering an alternative marketing plan for 2024 that was presented to her by Bill Duffy, the marketing manager. Based on sales from January through October 2023, Diana expected that 2024 sales would amount to 100,000 units. Bill's alternative marketing plan is presented below: 43 2024 Marketing Plan: "At the present time, we sell the product to retailers for $15.00 per rattle. Retailers generally charge the consumers between $16 and $16.50. If we cut our selling price to retailers to $14.00, I expect that the product will do much better. The retailers' increased markup will give them the incentive to display our product more prominently and to promote it more vigorously to customers. We should support this strategy by supplying more promotional materials to retailers, which I expect would be an increase of $2,000 in Advertising and Promotion costs. Based on the price cut and the increase in advertising and promotion, I expect that we will be able to boost our sales volume by 20 percent to 120,000 units in 2024." Diana received cost data from the company's CFO, Don Capp. Don expects that the cost data below are also reliable estimates for 2024 for a production volume up to 150,000 units. Beyond 150,000 units, the company would have to rent additional machines (with a capacity of 50,000 units each), which would increase fixed manufacturing overhead costs by $20,000 per machine. Sales Price (Current) Sales Price (Proposed) Direct Materials Direct Labor $15.00 per rattle $14.00 per rattle Show cribed Text 2023 Cost Data and Estimated 2024 Cost Data Per Unit Costs Total Costs $ $ $ $ 1.60 1.80 0.25 1.20 $360,000 Per Unit Costs Total Costs $ 1.50 $ 0.75 $ 90,000 $ 150,000 Part 1 Units Sold (Current) Units Sold (Proposed) Child's Play Company CVP Income Statement For the Year Ended December 31, 2023 Total $ Per Unit Child's Play Company CVP Income Statement. For the Year Ended December 31, 2024 Total $ Expected Increase 20,000 per machine: Per Unit Expected Increase Using the information on the "Case Study" tab, answer the following questions. Include all costs (manufacturing costs and selling. and administrative costs) in your calculations. 2,000 total 1. Prepare a CVP Income Statement for 2023 using the current production and sales volume (100,000 rattles) and the current cost data, assuming no changes to selling price or costs. Ĉ 100,000 120,000 2. Determine the number of rattles the company would need to sell in 2023 in order to break-even, assuming no changes to selling price or costs. Please show your work and round to the nearest next whole unit. 3. Assuming the selling price and cost changes in the Marketing Plan are adopted, prepare a CVP Income Statement for 2024, assuming sales and production increase by 20% as outlined in the Marketing Plan. 6 7 8 9 10 11 12 13 14 15. 16 17 18 19 20 21 22 23 24 25 26 27 10 11 12 13 14 15 16 17 18 19 20 28 Manufacturing Costs for rattles (based on production volume of 100,000 units): 29 30 31 32 33 Packaging 34 Variable Manufacturing Overhead 35 Fixed Manufacturing Overhead 36 37 Selling and Administrative Costs for rattles (based on sales volume of 100,000 units): 38 39 40 Sales Commissions 41 Shipping Costs 42 Advertising and Promotion (fixed) 43 Fixed Selling and Admin Expenses 44 24 26 35 36 37 38 39 40 41 Child's Play Company Child's Play Company makes a plastic rattle for toddlers. The rattle is generally marketed through exclusive retailers located in upscale shopping malls. In late 2023, Diana Suarez, the president of the company, was considering an alternative marketing plan for 2024 that was presented to her by Bill Duffy, the marketing manager. Based on sales from January through October 2023, Diana expected that 2024 sales would amount to 100,000 units. Bill's alternative marketing plan is presented below: 43 2024 Marketing Plan: "At the present time, we sell the product to retailers for $15.00 per rattle. Retailers generally charge the consumers between $16 and $16.50. If we cut our selling price to retailers to $14.00, I expect that the product will do much better. The retailers' increased markup will give them the incentive to display our product more prominently and to promote it more vigorously to customers. We should support this strategy by supplying more promotional materials to retailers, which I expect would be an increase of $2,000 in Advertising and Promotion costs. Based on the price cut and the increase in advertising and promotion, I expect that we will be able to boost our sales volume by 20 percent to 120,000 units in 2024." Diana received cost data from the company's CFO, Don Capp. Don expects that the cost data below are also reliable estimates for 2024 for a production volume up to 150,000 units. Beyond 150,000 units, the company would have to rent additional machines (with a capacity of 50,000 units each), which would increase fixed manufacturing overhead costs by $20,000 per machine. Sales Price (Current) Sales Price (Proposed) Direct Materials Direct Labor $15.00 per rattle $14.00 per rattle Show cribed Text 2023 Cost Data and Estimated 2024 Cost Data Per Unit Costs Total Costs $ $ $ $ 1.60 1.80 0.25 1.20 $360,000 Per Unit Costs Total Costs $ 1.50 $ 0.75 $ 90,000 $ 150,000 Part 1 Units Sold (Current) Units Sold (Proposed) Child's Play Company CVP Income Statement For the Year Ended December 31, 2023 Total $ Per Unit Child's Play Company CVP Income Statement. For the Year Ended December 31, 2024 Total $ Expected Increase 20,000 per machine: Per Unit Expected Increase Using the information on the "Case Study" tab, answer the following questions. Include all costs (manufacturing costs and selling. and administrative costs) in your calculations. 2,000 total 1. Prepare a CVP Income Statement for 2023 using the current production and sales volume (100,000 rattles) and the current cost data, assuming no changes to selling price or costs. Ĉ 100,000 120,000 2. Determine the number of rattles the company would need to sell in 2023 in order to break-even, assuming no changes to selling price or costs. Please show your work and round to the nearest next whole unit. 3. Assuming the selling price and cost changes in the Marketing Plan are adopted, prepare a CVP Income Statement for 2024, assuming sales and production increase by 20% as outlined in the Marketing Plan.
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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