Parisian Cosmetics Company is planning a one-month campaign for September to promote sales of one of its two cosmetics products. A total of $67,000 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: Moisturizer Perfume Unit selling price $42 $46 Unit production costs: Direct materials $8 $10 Direct labor 3 3 Variable factory overhead 2 3 Fixed factory overhead 3 5 Total unit production costs $16 $21 Unit variable selling expenses 13 13 Unit fixed selling expenses 8 4 Total unit costs $37 $38 Operating income per unit $5 $8 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 19,000 additional units of moisturizer or 16,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product. Required: 1a. Prepare a differential analysis as of August 21. If an amount is zero, enter "0". Differential Analysis Promote Moisturizer (Alt. 1) or Promote Perfume (Alt. 2) August 21 Promote Moisturizer (Alternative 1) Promote Perfume (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $fill in the blank 7fbd7602c029f82_1 $fill in the blank 7fbd7602c029f82_2 $fill in the blank 7fbd7602c029f82_3 Costs: Direct materials fill in the blank 7fbd7602c029f82_4 fill in the blank 7fbd7602c029f82_5 fill in the blank 7fbd7602c029f82_6 Direct labor fill in the blank 7fbd7602c029f82_7 fill in the blank 7fbd7602c029f82_8 fill in the blank 7fbd7602c029f82_9 Variable factory overhead fill in the blank 7fbd7602c029f82_10 fill in the blank 7fbd7602c029f82_11 fill in the blank 7fbd7602c029f82_12 Variable selling expenses fill in the blank 7fbd7602c029f82_13 fill in the blank 7fbd7602c029f82_14 fill in the blank 7fbd7602c029f82_15 Sales promotion fill in the blank 7fbd7602c029f82_16 fill in the blank 7fbd7602c029f82_17 fill in the blank 7fbd7602c029f82_18 Income (Loss) $fill in the blank 7fbd7602c029f82_19 $fill in the blank 7fbd7602c029f82_20 $fill in the blank 7fbd7602c029f82_21

Parisian Cosmetics Company is planning a one-month campaign for September to promote sales of one of its two cosmetics products. A total of $67,000 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: Moisturizer Perfume Unit selling price $42 $46 Unit production costs: Direct materials $8 $10 Direct labor 3 3 Variable factory overhead 2 3 Fixed factory overhead 3 5 Total unit production costs $16 $21 Unit variable selling expenses 13 13 Unit fixed selling expenses 8 4 Total unit costs $37 $38 Operating income per unit $5 $8 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 19,000 additional units of moisturizer or 16,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product. Required: 1a. Prepare a differential analysis as of August 21. If an amount is zero, enter "0". Differential Analysis Promote Moisturizer (Alt. 1) or Promote Perfume (Alt. 2) August 21 Promote Moisturizer (Alternative 1) Promote Perfume (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $fill in the blank 7fbd7602c029f82_1 $fill in the blank 7fbd7602c029f82_2 $fill in the blank 7fbd7602c029f82_3 Costs: Direct materials fill in the blank 7fbd7602c029f82_4 fill in the blank 7fbd7602c029f82_5 fill in the blank 7fbd7602c029f82_6 Direct labor fill in the blank 7fbd7602c029f82_7 fill in the blank 7fbd7602c029f82_8 fill in the blank 7fbd7602c029f82_9 Variable factory overhead fill in the blank 7fbd7602c029f82_10 fill in the blank 7fbd7602c029f82_11 fill in the blank 7fbd7602c029f82_12 Variable selling expenses fill in the blank 7fbd7602c029f82_13 fill in the blank 7fbd7602c029f82_14 fill in the blank 7fbd7602c029f82_15 Sales promotion fill in the blank 7fbd7602c029f82_16 fill in the blank 7fbd7602c029f82_17 fill in the blank 7fbd7602c029f82_18 Income (Loss) $fill in the blank 7fbd7602c029f82_19 $fill in the blank 7fbd7602c029f82_20 $fill in the blank 7fbd7602c029f82_21

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 3PA: Differential analysis for sales promotion proposal Kankakee Cosmetics Company is planning a...

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Differential Analysis for Sales Promotion Proposal

	Moisturizer	Perfume
Unit selling price		$42			$46
Unit production costs:
	Direct materials	$8		$10
	Direct labor	3		3
	Variable factory overhead	2		3
	Fixed factory overhead	3		5
	Total unit production costs	$16		$21
Unit variable selling expenses	13		13
Unit fixed selling expenses	8		4
	Total unit costs	$37		$38
Operating income per unit	$5		$8

No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 19,000 additional units of moisturizer or 16,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product.

Required:

1a. Prepare a differential analysis as of August 21. If an amount is zero, enter "0".

Differential Analysis
Promote Moisturizer (Alt. 1) or Promote Perfume (Alt. 2)
August 21
	Promote Moisturizer (Alternative 1)	Promote Perfume (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank 7fbd7602c029f82_1	$fill in the blank 7fbd7602c029f82_2	$fill in the blank 7fbd7602c029f82_3
Costs:
Direct materials	fill in the blank 7fbd7602c029f82_4	fill in the blank 7fbd7602c029f82_5	fill in the blank 7fbd7602c029f82_6
Direct labor	fill in the blank 7fbd7602c029f82_7	fill in the blank 7fbd7602c029f82_8	fill in the blank 7fbd7602c029f82_9
Variable factory overhead	fill in the blank 7fbd7602c029f82_10	fill in the blank 7fbd7602c029f82_11	fill in the blank 7fbd7602c029f82_12
Variable selling expenses	fill in the blank 7fbd7602c029f82_13	fill in the blank 7fbd7602c029f82_14	fill in the blank 7fbd7602c029f82_15
Sales promotion	fill in the blank 7fbd7602c029f82_16	fill in the blank 7fbd7602c029f82_17	fill in the blank 7fbd7602c029f82_18
Income (Loss)	$fill in the blank 7fbd7602c029f82_19	$fill in the blank 7fbd7602c029f82_20	$fill in the blank 7fbd7602c029f82_21

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