In 2014 Janice Martin fulfilled a life-long dream and moved her home-based cottage baking business to a retail storefront with a commercial kitchen. Since then, she has continued to develop here product lines and now specializes in three products featuring high quality cocoa: muffins, tortes, and cookies. Janice just received the latest annual income statement, shown below. Muffins Tortes Cookies Total Sales volume 100,000 boxes 60,000 tortes 40,000 boxes Sales revenue $2,500,000 $2,400,000 $480,000 $5,380,000 Cost of goods sold 1,500,000 1,380,000 240,000 3,120,000 Gross profit 1,000,000 1,020,000 240,000 2,260,000 Selling & Administrative Expense Variable 400,000 360,000 80,000 840,000 Fixed 330,000 260,000 180,000 770,000 Total Selling & Administrative Expense 730,000 620,000 260,000 1,610,000 Operating income (loss) $ 270,000 $ 400,000 $ (20,000) $ 650,000 Janice's accountant, Denis Mangic, provided her with the following unit costs for each of the three products so Janice can understand what is included in cost of goods sold. Muffins Tortes Cookies Variable cost of goods sold $12.00 $18.00 $4.00 Fixed cost of goods sold 3.00 5.00 2.00 Variable selling & administrative 4.00 6.00 2.00 Total unit cost $19.00 $29.00 $8.00 Denis informed Janice that in developing the product costs, he has allocated $1.00 per unit in fixed cost of goods sold for manufacturing overhead costs that are incurred to support the entire kitchen area. All other fixed costs are incurred to support individual product lines. He also confirmed that $240,000 in corporate advertising costs that, because the ads feature all three products, have been allocated equally across the three product lines as part of fixed selling and administrative expenses. A new coffee shop in town approached Janice and asked to purchase 5,000 boxes of cookies to serve in the shop. The owner has offered to pay $7.00 per box, but he would like the cookies to be individually packaged, which Janice estimates will add $0.25 in costs per box. Since the owner has contacted Janice directly, the bakery will save $0.75 per box in standard selling and administrative costs on the order. The bakery only has adequate capacity to produce 3,500 boxes. Calculate the contribution margin per box for the special order. ROUND YOUR ANSWER TO 2 DECIMAL PLACES. DO NOT INCLUDE A $ IN YOUR ANSWER. $ per box Calculate the total contribution margin Janice will earn from the special order if she accepts it. ROUND YOUR ANSWER TO WHOLE DOLLARS. DO NOT INCLUDE A $ IN YOUR ANSWER. INDICATE NEGATIVE NUMBERS WITH A MINUS SIGN (-). $ Should Janice should accept the special order (YES or NO)?
In 2014 Janice Martin fulfilled a life-long dream and moved her home-based cottage baking business to a retail storefront with a commercial kitchen. Since then, she has continued to develop here product lines and now specializes in three products featuring high quality cocoa: muffins, tortes, and cookies.
Janice just received the latest annual income statement, shown below.
| Muffins | Tortes | Cookies | Total | |
| Sales volume | 100,000 boxes | 60,000 tortes | 40,000 boxes | |
| Sales revenue | $2,500,000 | $2,400,000 | $480,000 | $5,380,000 |
| Cost of goods sold | 1,500,000 | 1,380,000 | 240,000 | 3,120,000 |
| Gross profit | 1,000,000 | 1,020,000 | 240,000 | 2,260,000 |
| Selling & Administrative Expense | ||||
| Variable | 400,000 | 360,000 | 80,000 | 840,000 |
| Fixed | 330,000 | 260,000 | 180,000 | 770,000 |
| Total Selling & Administrative Expense | 730,000 | 620,000 | 260,000 | 1,610,000 |
| Operating income (loss) | $ 270,000 | $ 400,000 | $ (20,000) | $ 650,000 |
Janice's accountant, Denis Mangic, provided her with the following unit costs for each of the three products so Janice can understand what is included in cost of goods sold.
| Muffins | Tortes | Cookies | |
| Variable cost of goods sold | $12.00 | $18.00 | $4.00 |
| Fixed cost of goods sold | 3.00 | 5.00 | 2.00 |
| Variable selling & administrative | 4.00 | 6.00 | 2.00 |
| Total unit cost | $19.00 | $29.00 | $8.00 |
Denis informed Janice that in developing the product costs, he has allocated $1.00 per unit in fixed cost of goods sold for
A new coffee shop in town approached Janice and asked to purchase 5,000 boxes of cookies to serve in the shop. The owner has offered to pay $7.00 per box, but he would like the cookies to be individually packaged, which Janice estimates will add $0.25 in costs per box. Since the owner has contacted Janice directly, the bakery will save $0.75 per box in standard selling and administrative costs on the order. The bakery only has adequate capacity to produce 3,500 boxes.
Calculate the contribution margin per box for the special order. ROUND YOUR ANSWER TO 2 DECIMAL PLACES. DO NOT INCLUDE A $ IN YOUR ANSWER.
$ per box
Calculate the total contribution margin Janice will earn from the special order if she accepts it. ROUND YOUR ANSWER TO WHOLE DOLLARS. DO NOT INCLUDE A $ IN YOUR ANSWER. INDICATE NEGATIVE NUMBERS WITH A MINUS SIGN (-).
$
Should Janice should accept the special order (YES or NO)?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
