Problem #1: Cost Estimation
Anna Martinez, manager of the Casa Real restaurant, wants to see whether her new advertising campaign is
working to increase sales. She obtained the following data for the last 10 months.
		month	advertising	revenues
		jan	$2,100	$35,200
		feb	$2,900	$39,850
		mar	$1,600	$35,700
		apr	$3,300	$41,300
		may	$1,100	$33,100
		jun	$1,850	$37,550
		jul	$1,350	$33,900
		aug	$4,200	$38,800
		sep	$2,400	$35,050
		oct	$2,850	$40,150
		average	$2,365	$37,060
-1	What is the incremental revenue per dollar of advertising? (2 points)
-2	What is revenue without any advertising? (2 points)
-2	The contribution margin for the restaurant is			28.5%	What is the minimum revenue per dollar of
	advertising required to make the advertising profitable? (2 points)
-3	What is expected revenue with		$2,850	of advertising? (2 points)

Problem #1: Standard Costing
	Ultra, Inc. manufactures and sells a full line of sunglasses. The company uses a standard cost system. Department
	managers' are held responsible for the explanation of the variances in their department performance reports.
	Recently, the variances in the Prestige line of sunglasses have been of concern. Data for the month of August is
	presented below. Assume beginning and ending inventory levels for WiP and FG are zero.
					Static Budget	Actual
	revenues				$600,000	$575,000
	DM				$150,000	$145,000
	DL				$135,000	$142,000
	FOH (cost driver = DL hours)				$114,000	$111,000
	gross profit				$201,000	$177,000
	selling price per Prestige sunglass				$76.923	$78.767
	DM (total # ounces)				15,600	16,000
	DL rate ($ per DL hour)				$18.00	$14.20
-1	Prepare the journal entry for the purchase of DM. (2 points)
	DM inventory
	DM spending variance
	accounts payable

Answer rating: 100% (QA)

Problem 1 Cost Estimation Anna Martinez manager of the Casa Real restaurant wants to see whether her ... View the full answer