Addie Page has recently acquired a franchise of a well-known fast-food restaurant chain. She is considering...
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Addie Page has recently acquired a franchise of a well-known fast-food restaurant chain. She is considering a special promotion for a week during which hamburger prices would be reduced $0.50 from the regular price of $1.20 to $0.70. Local advertising expenses for this special promotion will amount to $4,400. Addie expects the promotion to increase sales of hamburgers by 15% and French fries by 5%, but she expects the sales of chicken sandwiches to decline by 12% (because some customers, who otherwise may have ordered a chicken sandwich, will order a hamburger instead because of its attractive low price). The following data have been compiled for sales prices, variable costs, and weekly sales volumes: Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special promotion? What other considerations are relevant in this decision? Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special promotion? What other considerations are relevant in this decision? (Use a parentheses or a minus sign to show decreases and a net decrease in profit with promotion.) in revenues Chicken French Hamburgers sandwiches Fries Total Data table PRODUCT SALES PRICE VARIABLE COSTS SALES VOLUME Hamburgers $ 1.20 $ 0.60 20,000 Chicken sandwiches 1.40 0.70 21,000 French fries 0.80 0.30 23,000 Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special parentheses or a minus sign to show decreases and a net decrease in profit with promotion.) Chicken French Hamburgers sandwiches Fries Total Change in contribution margin with promotion Incremental costs Net effect Total sales with promotion Total sales without promotion Variable costs with promotion Variable costs without promotion Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special promotion? What other considerations are relevant in this decision? (Use a parentheses or a minus sign to show decreases and a net decrease in profit with promotion.) Net decrease Net increase in revenues Hamburgers Chicken sandwiches French Fries Total Addie Page has recently acquired a franchise of a well-known fast-food restaurant chain. She is considering a special promotion for a week during which hamburger prices would be reduced $0.50 from the regular price of $1.20 to $0.70. Local advertising expenses for this special promotion will amount to $4,400. Addie expects the promotion to increase sales of hamburgers by 15% and French fries by 5%, but she expects the sales of chicken sandwiches to decline by 12% (because some customers, who otherwise may have ordered a chicken sandwich, will order a hamburger instead because of its attractive low price). The following data have been compiled for sales prices, variable costs, and weekly sales volumes: Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special promotion? What other considerations are relevant in this decision? Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special promotion? What other considerations are relevant in this decision? (Use a parentheses or a minus sign to show decreases and a net decrease in profit with promotion.) in revenues Chicken French Hamburgers sandwiches Fries Total Data table PRODUCT SALES PRICE VARIABLE COSTS SALES VOLUME Hamburgers $ 1.20 $ 0.60 20,000 Chicken sandwiches 1.40 0.70 21,000 French fries 0.80 0.30 23,000 Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special parentheses or a minus sign to show decreases and a net decrease in profit with promotion.) Chicken French Hamburgers sandwiches Fries Total Change in contribution margin with promotion Incremental costs Net effect Total sales with promotion Total sales without promotion Variable costs with promotion Variable costs without promotion Requirement Evaluate the expected impact of the special promotion on sales and profits. Should Addie go ahead with this special promotion? What other considerations are relevant in this decision? (Use a parentheses or a minus sign to show decreases and a net decrease in profit with promotion.) Net decrease Net increase in revenues Hamburgers Chicken sandwiches French Fries Total
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Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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