Box Trotters Inc. was born when two baby boomers recognized the lack of ballroom dancing skills in
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Box Trotters Inc. was born when two baby boomers recognized the lack of ballroom dancing skills in todays youngsters. Tom and Edna quickly realized that they could teach young adults and older adults how to dance very quickly if the learners had visual assistance. In the process of working through their approach, they designed and patented a times lightweight mat that could be unrolled, revealing visual markers of where dancers should move their feet on the next musical beat. Soon, many a grandchild felt compelled to keep his or her grandparents slide steps alive.
Box Trotters Inc. incurred the following costs last year in its production and sale of dance mats.
Cost Description
Amount
Product or Period
Variable or Fixed
Depreciation on factory
$
Executive salaries
Direct material costs
Administrative salaries
Wages for factory workers
Advertising expense
Indirect materials
Factory supervisor salaries
Commissions to salespeople
Required
Fill in the last two columns of the chart, identifying whether each cost is a product cost or period cost, and also whether the behavior of each cost is variable or fixed.
The above cost information was incurred last year when the units were sold at an average selling price of $unit In Excel, create two income statements in good form: a traditional gross margin format income statement, and a contribution margin format income statement. Referencing the appropriate information and utilizing formulas within Excel, populate each of the income statements to determine operating income for Box Trotters under both income statement formats.
Comment on any noticeable similarities or differences in the bottomline amounts of these two income statements.
Now assume that Box Trotters expects very similar sales volume, selling price, and costs next year, except that its factory wages will increase by as will the commissions to salespeople. Determine projected gross margin, contribution margin, and operating income for Box Trotters given these assumptions. Explain your results in comparison to last years performance.
Related Book For
Understanding Business Ethics
ISBN: 9781506303239
3rd Edition
Authors: Peter A. Stanwick, Sarah D. Stanwick
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