Quench Their Thirst (QTT) is a not-for-profit organization located in Vancouver. It makes and sells bottled...
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Quench Their Thirst (QTT) is a not-for-profit organization located in Vancouver. It makes and sells bottled water, and for every bottle sold, it puts $0.25 toward providing clean drinking water to those in need. QTT works with another not-for-profit organization, Clean Water Aid (CWA), whose mission is to provide clean drinking water. Once CWA identifies an area of significant need, there are various ways that it provides aid. For example, in some cases, it donates or purchases equipment that will clean the water to be safe for con- sumption. In other cases, CWA ships water directly to the identified areas. CWA provides a detailed audited report annually of the aid provided to various affected areas. Once a year, the founder of CWA travels to the areas that have received support to ensure that the resources are being used effectively. QTT has been in operation for just over a year. The two founders, Alex and Yim-Ling Huang, have been married for just over three years. In order be able to devote themselves full-time to QTT, they live in Alex's parents' basement. His parents are very generous and do not require any rent payments, but the couple is considering moving out soon. However, in order to do so, they will need to start to take more salary out of QTT. As it stands right now, the couple is paid a combined salary of $25,000 from QTT, which is the maxi- mum amount of cash that is available for withdrawal. Alex and Yim-Ling are wondering by how much they would have to increase sales in order to be able to withdraw a combined salary of $80,000. As they sat down As Alex and Yim-Ling sat down to discuss whether they could manage an increase in sales, they considered their organization's data: Exhibit 1 QTT Not-For-Profit (year-ended December 31, 2022) 2,300,000 1,400,000 500,000 300,000 700,000 375,000 400,000 25,000 Sales Revenue CM Direct Materials DL Wages Selling Expenses Insurance Other Costs (75% fixed) Net Income/(Loss) Sales Mix 5 single-size bottles are sold for every 1 case of bottled water. Product Financials $ Single-size bottled water: Case of bottled water: $2.25 price $ 10 price variable cost per unit: $1.00 variable cost per unit $3.00 Instead of a combined salary of $80,000, Alex and Yim-Ling would like to withdraw $120,000 salary (between both of them). At this level of 'target profit', determine the number of units of each bottled-water product (single size and case) that would need to be sold. Assume that the $0.25 donation has already been incorporated into the variable costs per unit. How would your answer change if the price of each case was increased to $12? Show your math and the number of each product type sold, to reach $120,000 'target profit'. Comment, in two brief bullet points, to compare your answer with the $10 case price. Each bullet point no more than 8 words. HINT: in your calculations, do not round numbers until your final number of units answers. Write one short (one line only) sentence of insight/conclusion. Quench Their Thirst (QTT) is a not-for-profit organization located in Vancouver. It makes and sells bottled water, and for every bottle sold, it puts $0.25 toward providing clean drinking water to those in need. QTT works with another not-for-profit organization, Clean Water Aid (CWA), whose mission is to provide clean drinking water. Once CWA identifies an area of significant need, there are various ways that it provides aid. For example, in some cases, it donates or purchases equipment that will clean the water to be safe for con- sumption. In other cases, CWA ships water directly to the identified areas. CWA provides a detailed audited report annually of the aid provided to various affected areas. Once a year, the founder of CWA travels to the areas that have received support to ensure that the resources are being used effectively. QTT has been in operation for just over a year. The two founders, Alex and Yim-Ling Huang, have been married for just over three years. In order be able to devote themselves full-time to QTT, they live in Alex's parents' basement. His parents are very generous and do not require any rent payments, but the couple is considering moving out soon. However, in order to do so, they will need to start to take more salary out of QTT. As it stands right now, the couple is paid a combined salary of $25,000 from QTT, which is the maxi- mum amount of cash that is available for withdrawal. Alex and Yim-Ling are wondering by how much they would have to increase sales in order to be able to withdraw a combined salary of $80,000. As they sat down As Alex and Yim-Ling sat down to discuss whether they could manage an increase in sales, they considered their organization's data: Exhibit 1 QTT Not-For-Profit (year-ended December 31, 2022) 2,300,000 1,400,000 500,000 300,000 700,000 375,000 400,000 25,000 Sales Revenue CM Direct Materials DL Wages Selling Expenses Insurance Other Costs (75% fixed) Net Income/(Loss) Sales Mix 5 single-size bottles are sold for every 1 case of bottled water. Product Financials $ Single-size bottled water: Case of bottled water: $2.25 price $ 10 price variable cost per unit: $1.00 variable cost per unit $3.00 Instead of a combined salary of $80,000, Alex and Yim-Ling would like to withdraw $120,000 salary (between both of them). At this level of 'target profit', determine the number of units of each bottled-water product (single size and case) that would need to be sold. Assume that the $0.25 donation has already been incorporated into the variable costs per unit. How would your answer change if the price of each case was increased to $12? Show your math and the number of each product type sold, to reach $120,000 'target profit'. Comment, in two brief bullet points, to compare your answer with the $10 case price. Each bullet point no more than 8 words. HINT: in your calculations, do not round numbers until your final number of units answers. Write one short (one line only) sentence of insight/conclusion.
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The founders of Quench Their Thirst QTT wish to withdraw a combined salary of 80000 and then adjust it to 120000 for their target profit which is an increase from the 25000 they are currently taking T... View the full answer
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Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey
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