Jim is a florist who runs Bountiful Flower Shop as a sole owner. His typical monthly operating
Question:
Jim is a florist who runs Bountiful Flower Shop as a sole owner. His typical monthly operating results include the following: sales revenue $4,000, flower costs $800, supplies $300, labor costs $600, utilities $250, rent $720, and other costs $350.
Jim recently attended a trade show and was attracted by a national chain that offered him referral service, baskets, and new flower arrangements in exchange for a monthly licensing fee of $1,000. He figures that the additional business from referrals will increase his revenues by 40%, flower materials, supplies, and labor costs by 45%, utilities by 10%, and other costs by 20%. Rent will not change as he would still use the same facility.
A. Should Jim expand his business to be associated with the national chain?________ In the space below, show how you determined your answer?
B. If Jim can negotiate a different term with the national chain, what licensing fee makes him indifferent between the two choices (i.e., the status quo of going solo vs. the alternative of being associated with the national chain)?
Write you answer on this line ____________________ .Show your work below.
Question 2
The account balances are listed below for Eagle Manufacturing Company for the month of March.
| Finished goods inventory, March 31 | $29,000 | Direct materials purchases | $70,000 | |
| Indirect labor | 21,000 | Direct labor | 48,000 | |
| Work-in-process inventory, March 31 | 73,000 | Factory supervisory salaries | 12,000 | |
| Direct materials inventory, March 1 | 12,000 | Factory utilities expense | 4,000 | |
| Work-in-process inventory, March 1 | 54,000 | Factory depreciation expense | 5,000 | |
| Finished goods inventory, March 1 | 33,000 | Direct materials inventory, March 31 | 21,000 |
Using the form below, prepare a cost of goods manufactured and sold statement for Eagle Manufacturing Company for the month ended March 31.
Expert Answer:
A To determine whether Jim should expand his business to be associated with the national chain we need to compare the financial impact of the expansion Current Monthly Operating Results Sales Revenue ... View the full answer
