Jen and Barry's ice cream shop charges $1.55 for a cone. Variable expenses are $0.33 per cone, and fixed costs total $2,300 permonth. A Valentine's Day promotion is being planned for the second week of February. During this week, a person buying a cone atthe regular price would receive a free cone for a friend. It is estimated that 775 additional cones would be sold and that 975 coneswould be given away. Advertising costs for the promotion would be $155.Required:a. Calculate the effect of the promotion on operating income for the second week of Februaryb. Do you think the promotion should occur?Complete this question by entering your answers in the tabs below.Required A Required BCalculate the effect of the promotion on operating income for the second week of February.Note: Do not round intermediate calculation and round your final answer to 2 decimal places.in operating incomeNetRequired ARequired B > Jen and Barry's ice cream shop charges $1.55 for a cone. Variable expenses are $0.33 per cone, and fixed costs total $2,300 permonth. A Valentine's Day promotion is being planned for the second week of February. During this week, a person buying a cone atthe regular price would receive a free cone for a friend. It is estimated that 775 additional cones would be sold and that 975 coneswould be given away. Advertising costs for the promotion would be $155.Required:a. Calculate the effect of the promotion on operating income for the second week of February.b. Do you think the promotion should occur?Complete this question by entering your answers in the tabs below.Required A Required BDo you think the promotion should occur?< Required ARequired B

Computation of Contribution per cone: Particulars Amount Sale price per cone…

Answered: Jen and Barry's ice cream shop charges…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....

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Maria Cohen is employed as a salesperson in the mens department of Lees Fashions. In addition to her weekly base salary of 400 (35-hour week), Cohen is paid a commission of 1% on her total net sales for the week (total gross sales less any customer returns). During the past week, to promote the sale of its fine cashmere sweaters, Lees agreed to pay Cohen an additional PM (push money) of 3% of the total net sales of cashmere sweaters. Cohens weekly sales tally is given below. Compute Cohens total weekly earnings, showing her (a) weekly base salary, (b) commission, (c) PM, and (d) total weekly earnings.
Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge for each copy made. Markson made 9,000 copies and paid a total of $480 in January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson uses the high-low method to analyze costs?
Cinnamon Depot bakes and sells cinnamon rolls for $1.75 each. The cost of producing 500,000 rolls in the prior year was: At the start of the current year, Cinnamon Depot received a special order for 18,000 rolls to be sold for $1.50 per roll. The company estimates it will incur an additional $1,000 in total fixed costs in order to lease a special machine that forms the rolls in the shape of a heart per the customers request. This order will not affect any of its other operations. Should the company accept the special order? (Show your work.)
Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help in organizing its inventory. Due to the steep learning curve required to use the new software, Garrison must decide between hiring two part-time college students or one full-time employee. Each college student would work 20 hours per week, and would earn $1 S per hour. The full-time employee would work 40 hours per week and would earn $15 per hour plus the equivalent of $2 per hour in benefits. Employees are given two polo shirts to wear as their uniform. The polo-shirts cost Garrison $10 each. What are the relevant costs, relevant revenues, sunk costs, and opportunity costs for Garrison?
Able Transport operates a tour bus that they lease with terms that involve a fixed fee each month plus a charge for each mile driven. Able Transport drove the bus 7,000 miles and paid a total of $1,360 in June. In October. Able Transport paid $1,280 for the 5,000 miles driven. If Able Transport uses the high-low method to analyze costs, how much would Able Transport pay in December, if they drove 6,000 miles?
Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?
Pam and Lenny’s ice cream shop charges $1.75 for a cone. Variable expenses are $0.42 per cone, and fixed costs total $2,500 per month. A "sweetheart" promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 625 additional cones would be sold and that 825 cones would be given away. Advertising costs for the promotion would be $170. Required: a. Calculate the effect of the promotion on operating income for the second week of February. (Do not round intermediate calculation and round your final answer to 2 decimal places.) b. Do you think the promotion should occur?multiple choice Yes No
Jen and Barry’s ice cream shop charges $1.7 for a cone. Variable expenses are $0.31 per cone, and fixed costs total $2,100 per month. A Valentine’s Day promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 600 additional cones would be sold and that 700 cones would be given away. Advertising costs for the promotion would be $160. Required: a. Calculate the effect of the promotion on operating income for the second week of February. b. Do you think the promotion should occur?
ABC operates a consignment shop where she sells clothes for women and children. The average number of consignments sold per month is 1,000. The average material cost and the selling price of each consignment are $8 and $20, respectively. The monthly fixed costs to run this business are given below: Rental cost: $750Utilities: $150Advertising: $35Insurance: $100Labor cost: $4,000 Using Excel spreadsheet / worksheet, determine Anna's profit. Attach excel solution.
Megan's Bridal Shoppe is a bridal shop that offers wedding gowns. Each outfit sells for $1,000 on average, with variable expenses of $400 and fixed costs of $90,000. When 200 gowns are sold, what is the Bridal Shoppe's operational income?
Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $40 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows: Sales revenue $840,000 Variable expenses 630,000 Contribution margin 210,000 Fixed expenses 112,000 Operating income $ 98,000 a.What is FirstCakes' contribution margin per unit? b.What is FirstCakes' monthly breakeven point in units? c.What is FirstCakes' contribution margin ratio? d.What is FirstCakes' monthly breakeven point in sales dollars?

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