Differential Analysis Report for Sales Promotion Proposal Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $98,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign. Cross-Trainer Running Shoe Shoe Unit selling price $70 $77 Unit production costs: Direct materials $ (13) $(17) Direct labor (4) (6) Variable factory overhead (3) (4) Fixed factory overhead (7) (8) Total unit production costs $(27) $(35) Unit variable selling expenses (23) (21) Unit fixed selling expenses (13) (8) Total unit costs $(63) $(64) Operating income per unit $7 $ 13 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 20,000 additional units of cross-trainer shoes or 17,000 additional units of running shoes could be sold without changing the unit selling pric either product. Required: 1. Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes. Rocket Shoe Company Proposals for Sales Promotion Campaign Differential Analysis Report Cross-Trainer Shoes Running Shoe Differential revenue from proposals Differential cost of proposals: Direct materials Direct labor Variable factory overhead Variable selling expenses Differential cost of proposals Net differential income from proposed sales promotion campaign

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3PB

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Differential Analysis Report for Sales Promotion Proposal

(SEE ATTACHMENT FOR QUESTION OVERVIEW, I started, but it's probably wrong)

Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $98,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign.

	Cross-Trainer Shoe	Running Shoe
Unit selling price	$70		$77
Unit production costs:
Direct materials	$ (13)		$(17)
Direct labor	(4)		(6)
Variable factory overhead	(3)		(4)
Fixed factory overhead	(7)		(8)
Total unit production costs	$(27)		$(35)
Unit variable selling expenses	(23)		(21)
Unit fixed selling expenses	(13)		(8)
Total unit costs	$(63)		$(64)
Operating income per unit	$ 7		$ 13

No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 20,000 additional units of cross-trainer shoes or 17,000 additional units of running shoes could be sold without changing the unit selling price of either product.

Required:

1. Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes.

Rocket Shoe Company

Proposals for Sales Promototion Campaign

Differential Analysis Report

	Cross-Trainer Shoes	Running Shoe
Differential revenue from proposals	$	$
Differential cost of proposals:
a. (Choose from option below)	$	$
b. (Choose from option below)
c. (Choose from option below)
d. (Choose from option below)
e. (Choose from option below)
Differential cost of proposals	$	$
f. (Choose from option below)	$	$

a. Options:

1. Direct materials

2. Fixed Factory overhead

3. Operating income per unit