Applehead Technology is a company that purchases a device called the EyePod from a supplier and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Applehead Technology is a company that purchases a device called the EyePod from a supplier and then sells the devices to retail customers. Applehead ships to its customers FOB shipping point. Applehead is seeking to increase its operating profit as much as possible. If it makes no changes in its operations, the company expects the following for the coming year. # of units sold Price Shipping costs Cost of merchandise Rent of facilities and equipment Managerial and administrative salaries 30,000 $300 per unit $ 2 per unit $160 per unit $1,000,000 $ 1,500,000 Knowing that the company wishes to increase its operating profit, Maria Garcia, the marketing manager, says "I think we should make 2 changes: first, reduce our price to $290 and, second, we should begin to ship FOB destination. If we take these actions, I estimate we will increase the number of units sold to 32,500." a. On the spreadsheet provided, prepare contribution margin income statements to analyze each of the 2 possibilities for the coming year, namely (14 Points) i. ii. Applehead makes no changes Applehead adopts Garcia's proposal b. Given Applehead's goal of maximizing its operating profit, based solely on your calculations, should it make the change that the marketing manager suggests? Why or why not? Answer in about a sentence in the space provided on the spreadsheet. (6 points) For question #2a Sales Variable Costs Contribution Margin Fixed Costs Operating Profit For question #2b: Adopt Marketing Make no changes Manager's Proposal Total Computation Total Computation c. If the company does not adopt Garcia's proposals, how many EyePods (units) would it need to sell in order to break even? Show all work in the space provided. (5 points) d. If the company did not adopt Garcia's proposals and actually sells the 30,000 units at $300 each, what is its margin of safety, expressed as a percent? Show all work in the space provided. (round to second decimal places) (5 points) Applehead Technology is a company that purchases a device called the EyePod from a supplier and then sells the devices to retail customers. Applehead ships to its customers FOB shipping point. Applehead is seeking to increase its operating profit as much as possible. If it makes no changes in its operations, the company expects the following for the coming year. # of units sold Price Shipping costs Cost of merchandise Rent of facilities and equipment Managerial and administrative salaries 30,000 $300 per unit $ 2 per unit $160 per unit $1,000,000 $ 1,500,000 Knowing that the company wishes to increase its operating profit, Maria Garcia, the marketing manager, says "I think we should make 2 changes: first, reduce our price to $290 and, second, we should begin to ship FOB destination. If we take these actions, I estimate we will increase the number of units sold to 32,500." a. On the spreadsheet provided, prepare contribution margin income statements to analyze each of the 2 possibilities for the coming year, namely (14 Points) i. ii. Applehead makes no changes Applehead adopts Garcia's proposal b. Given Applehead's goal of maximizing its operating profit, based solely on your calculations, should it make the change that the marketing manager suggests? Why or why not? Answer in about a sentence in the space provided on the spreadsheet. (6 points) For question #2a Sales Variable Costs Contribution Margin Fixed Costs Operating Profit For question #2b: Adopt Marketing Make no changes Manager's Proposal Total Computation Total Computation c. If the company does not adopt Garcia's proposals, how many EyePods (units) would it need to sell in order to break even? Show all work in the space provided. (5 points) d. If the company did not adopt Garcia's proposals and actually sells the 30,000 units at $300 each, what is its margin of safety, expressed as a percent? Show all work in the space provided. (round to second decimal places) (5 points)
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Jan Flenderson, marketing manager at Awesome Bits Games (ABG), was starting to get worried. The Kickstarter crowdfunding campaign for the latest company board game, Undead Rising, had gone live at 3...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Which of the following quadratic equations is in standard form? (a) x 2 7x = 5 (b) 9 = x (c) (x + 5)(x - 4) = 0 (d) 0 = 5x - 6x - 1
-
What is probably being misunderstood by a person who says, "But that's only a scientific theory"?
-
What is the relevance and importance of Proportional consolidation in preparing consoliidated financial statements?
-
A four cylinder, four stroke cycle petrol engine develops \(40 \mathrm{~kW}\) at \(2500 \mathrm{rpm}\). The mean effective pressure is \(0.8 \mathrm{MPa}\) and mechanical efficiency is \(80 \%\)....
-
Sierra Company incurs the following costs to produce and sell a single product. During the last year, 25,000 units were produced and 22,000 units were sold. The Finished Goods inventory account at...
-
For the bussines environtment stand point of GE SEC 10 k explain the following, When it comes to risks, what issues might your company face? To find out, search your company's PDF version of the SEC...
-
A solution contains 0.356 M NH4Br and 7.8210-2 M ammonia. The pH of this solution is
-
Discuss the employment-at-will doctrine.
-
Discuss why employment disclaimers are important to the employer.
-
Describe effective hiring practices and the importance of clear communications.
-
Describe the rights and responsibilities of employees.
-
Describe under what circumstances employers often discharge an employee.
-
1. Present and future value tables of $1 at 3% are presented below Today, Thomas deposited $160,000 in a 3-year, 12% CD that compounds quarterly. What is the maturity value of the CD? A. $174,400. B....
-
The water in tank A is at 270 F with quality of 10% and mass 1 lbm. It is connected to a piston/cylinder holding constant pressure of 40 psia initially with 1 lbm water at 700 F. The valve is opened,...
-
Let \(X_{1}, X_{2}, \ldots, X_{5}\) be 5 independent random variables. Find the moment generating function \[M_{\sum X_{i}}(t)=E\left(e^{t\left(X_{1}+X_{2}+\cdots+X_{5} ight)} ight)\] of the sum when...
-
Let \(X_{1}, X_{2}\), and \(X_{3}\) be independent normal variables with \[\begin{array}{lll}E\left(X_{1} ight)=5 & \text { and } & \sigma_{1}^{2}=9 \\E\left(X_{2} ight)=-2 & \text { and } &...
-
Refer to Exercise 6.36. (a) Show that \(2 X_{1}-X_{2}-4 X_{3}-12\) has a normal distribution. (b) Find the mean and variance of the random variable in part (a). Data From Exercise 6.36 6.36 Let X1,...
Study smarter with the SolutionInn App