Answered: Use share point analysis to determine…

Use share point analysis to determine how much Ben's should increase their administrative expenditures this year in order to reach their goal.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 18E

See similar textbooks

Similar questions

Jack Jones, the materials manager at Precision Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows that the inventory investment for raw materials is $3,672,800, for work-in-process is $6,978,000, and for finished goods is $2,675,000. This year's cost of goods sold will be about $24,700,000. Assume that there are 52 business weeks per year. a. Express total inventory as weeks of supply. The weeks of supply is 28.05 weeks. (Enter your response rounded to one decimal place.) b. Express total inventory as inventory turns. The inventory turnover is turns per year. (Enter your response rounded to one decimal place.)
(Tony) Tony's Tasty Rigatoni is looking to improve its market share in the pasta noodle industry. The company reported sales revenue of $2,560,000 last year in an industry of $16,000,000 across all brands. The costs of the goods sold over the past year was $800,000. Also, Tony's Tasty Rigatoni spent $200,000 in administrative expenses while the industry as a whole (including Tony's) spent $1,500,000. Suppose they would like to achieve a market share of 20% in the upcoming year. Use share point analysis to determine how much Tony's should increase their administrative expenditures this year in order to reach their goal. (Round all calculations, including intermediary calculations, to the nearest dollar.) O $12,000 O $102,000 $90,000 $48,000 $60.000
Jack Jones, the materials manager at Precision Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows that the inventory investment for raw materials is $4,076, 100, for work-in-process is $6,888,000, and for finished goods is $2,994,000. This year's cost of goods sold will be about $30,108,000. Assume that there are 52 business weeks per year. a. Express total inventory as weeks of supply. The weeks of supply is weeks. (Enter your response rounded to one decimal place.) 27 **
The Food division of Garcia Company reports the following for the current year. Sales Cost of goods sold Gross profit Expenses Income Garcia wants to achieve at least a 10% profit margin next year. Two alternative strategies are proposed. Strategy 1: Increase advertising expenses by $225,000. The company expects this to increase sales by $660,000. Cost of goods sold will not change. Strategy 2: Develop a more efficient manufacturing process. This will decrease cost of goods sold by $127,000. a. For each strategy, compute the profit margin expected for next year. b. Which strategy should Garcia choose based on expected profit margin? Complete this question by entering your answers in the tabs below. Required 1 $ 4,180,000 2,860,000 1,320,000 1,029,000 $ 291,000 Required Strategy 1 Strategy 2 For each strategy, compute the profit margin expected for next year. Note: Round your answers to one decimal place. Profit margin % %
Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year’s operations (revenues and costs in thousands of dollars). Store Revenues Costs 101 $4,220 $4,394 102 2,347 3,134 103 5,918 5,361 104 4,222 4,298 105 3,094 4,036 106 4,263 3,739 107 7,014 5,209 108 1,959 2,974 109 6,016 5,168 110 3,588 3,319 111 4,126 4,479 112 4,990 3,440 113 3,672 2,916 114 5,297 4,895 115 2,724 3,166 Required a. Use the high-low method to estimate the fixed and variable portions of store costs based on revenues. b. Managers estimate that one of the proposed stores will have revenues of $3.7 million. What are the estimated monthly overhead costs, assuming no…
Alydar, Inc., manufactures and sells automotive tools through three divisions: Eastern, Southern, and International. Each division is evaluated as a profit center. Data for each division for last year are as follows: Eastern Southern International Sales $3,150,000 $987,000 $6,500,000 Cost of goods sold 1,580,000 680,000 4,100,000 Selling and administrative expenses 337,000 280,000 620,000 Alydar, Inc., had corporate administrative expenses equal to $585,000; these were not allocated to the divisions. Required: 1. Prepare a segmented income statement for Alydar, Inc., for last year. Alydar, Inc. Segmented Income Statement For last year Eastern Total Southern International
Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year’s operations (revenues and costs in thousands of dollars). Store Revenues Costs 101 $4,240 $4,424 102 2,367 3,174 103 5,948 5,391 104 4,262 4,348 105 3,124 4,096 106 4,303 3,809 107 7,034 5,239 108 1,989 3,074 109 6,116 5,248 110 3,648 3,379 111 4,166 4,529 112 5,040 3,480 113 3,692 2,976 114 5,377 4,935 115 2,824 3,196 Required a. Use the high-low method to estimate the fixed and variable portions of store costs based on revenues. b. Managers estimate that one of the proposed stores will have revenues of $3.9 million. What are the estimated monthly overhead costs, assuming no…
Reliant Chairs sells designer seating to consumers through retail outlets. Total industry sales for the market last year were $128 million, with Reliant’s sales representing 6.5% of that total. Contribution margin is 18%. Reliant’s sales force calls on retail outlets and each sales rep earns $45,500 per year, plus 2.5% commission on all sales. Retailers receive a 38% margin on selling price and generate average revenue of $12,000 per outlet for Reliant. The marketing manager has suggested increasing customer advertising by $200,000. By how much would dollar sales need to increase to break even on this expenditure? What increase in overall market share does this represent? Another suggestion is to hire 3 more sales representatives to gain new consumer retail accounts. How many new retail outlets would be necessary to break even on the increased cost of adding the 3 sales reps? A final suggestion is to make a 10% price reduction across the board. By how much would dollar sales need to…
Fortunate Inc. is involved in retailing and has three profit centers classified as “East” and “West” and “South.” East Division sold 38,000 units during the year for a selling price of $25 each—These items cost $15 each and had $2.50 of variable selling expenses (sales commissions) that could be directly traced to the units. West Division sold 16,000 units during the year for a selling price of $27 each—These items cost $17 each and that had $3 of variable selling expenses (sales commissions) that could be directly traced to the units. South Division sold 42,000 units during the year for a selling price of $26 each—These items cost $16 each and had $2 of variable selling expenses (sales commissions) that could be directly traced to the units. Fixed Division Operating Costs that could be directly traced to the divisions were $160,000 for East Division and $95,000 for West Division, and $200,000 for South Division. There were $230,000 of Corporate Costs (which was $20,000 for…
Cora Manufacturing makes fashion products and competes on the basis of quality and leading-edge designs. The company has two divisions, clothing and cosmetics. Cora has $5,000,000 invested in assets in its clothing division. After-tax operating income from sales of clothing this year is $1,000,000. The cosmetics division has $12,500,000 invested in assets and an after-tax operating income this year of $2,000,000. The weighted-a verage cost of capital for Cora is 6%. The CEO of Cora has told the manager of each division that the division that “performs best” this year will get a bonus. Q.What nonfinancial measures could Cora use to evaluate divisional performances?
Sunland Candy Company is a wholesale distributor of candy. The company services grocers, convenience stores, and drugstores in a large metropolitan area. Sunland Candy Company has achieved small but steady growth in sales over the past few years, but costs have also been increasing. The company is formulating its plans for the coming fiscal year. The following data were used to project the current year's after-tax operating income of $213,312: Average selling price Average variable costs Cost of candy Selling expenses Total Annual fixed costs Selling Administrative Total (c) $8.00 per box $4.00 per box 0.80 per box $4.80 per box $300,800 631,600 $932,400 The expected annual sales volume (733,200 boxes) is $5,865,600 and the tax rate is 40%. Candy manufacturers have announced that they will increase the prices of their products by an average of 15% in the coming year because of increases in raw material (sugar, cocoa, peanuts, and so on) and labour costs. Sunland Candy Company expects…
Ronald Medical Supply is a retailer of home medical equipment. Last year, Ronald's sales revenues totaled $6,100,000. Total expenses were $2,590,000. Of this amount, approximately $1,342,000 were variable, while the remainder were fixed. Since Ronald's offers thousands of different products, its managers prefer to calculate the breakeven point in terms of sales dollars rather than units. Read the requirements. Requirement 1. What is Ronald's current operating income? Begin by identifying the formula to compute the operating income. Requirements G Operating income Print 1. What is Ronald's current operating income? 2. What is Ronald's contribution margin ratio? 3. What is the company's breakeven point in sales dollars? (Hint: The contribution margin ratio calculated in Requirement 2 is already weighted by the company's actual sales mix.) - X 4. Ronald's top management is deciding whether to embark on a $230,000 advertising campaign. The marketing firm has projected annual sales volume…