Question 2] Happy Feet buys hiking socks for $6 a pair and sells them for $10. Management budgets monthly fixed costs of $12,000 for sales volumes between 0 and 12,000 pairs. Requirements Consider each of the following questions separately by using the foregoing information each time. Question 1,2,3 were answered in a pervious submission. I only need the answer to question 4 and 5. 4. Happy Feet plans to advertise in hiking magazines. The advertising campaigns will increase total fixed costs by $2,000 per month. Calculate the new breakeven point in units. 5. In addition to selling hiking socks, Happy Feet would like to start selling sports socks. Happy Feet expects to sell one pair of hiking socks for every three pairs of sports socks. Happy Feet will buy the sports socks for $4 a pair and sell them for $8 a pair. Total fixed costs will stay at $12,000 per month. Calculate the breakeven point in units for both hiking socks and sports socks.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
[Question 2]
Happy Feet buys hiking socks for $6 a pair and sells them for $10. Management budgets monthly fixed costs of $12,000 for sales volumes between 0 and 12,000 pairs.
Requirements
Consider each of the following questions separately by using the foregoing information each time.
Question 1,2,3 were answered in a pervious submission. I only need the answer to question 4 and 5.
4. Happy Feet plans to advertise in hiking magazines. The advertising campaigns will increase total fixed costs by $2,000 per month. Calculate the new breakeven point in units.
5. In addition to selling hiking socks, Happy Feet would like to start selling sports socks. Happy Feet expects to sell one pair of hiking socks for every three pairs of sports socks. Happy Feet will buy the sports socks for $4 a pair and sell them for $8 a pair. Total fixed costs will stay at $12,000 per month. Calculate the breakeven point in units for both hiking socks and sports socks.
![[Question 2]
Happy Feet buys hiking socks for $6 a pair and sells them for $10. Management budgets
monthly fixed costs of $12,000 for sales volumes between 0 and 12,000 pairs.
Requirements
Consider each of the following questions separately by using the foregoing information
each time.
1.
Calculate the breakeven point in units.
2.
Happy Feet reduces its selling price from $10 a pair to $8 a pair. Calculate the
new breakeven point in units.
3.
Happy Feet finds a new supplier for the socks. Variable costs will decrease by
$1 a pair. Calculate the new breakeven point in units.
4.
Happy Feet plans to advertise in hiking magazines. The advertising campaigns
will increase total fixed costs by $2,000 per month. Calculate the new breakeven point
in units.
In addition to selling hiking socks, Happy Feet would like to start selling sports socks.
Happy Feet expects to sell one pair of hiking socks for every three pairs of sports
socks. Happy Feet will buy the sports socks for $4 a pair and sell them for $8 a pair.
Total fixed costs will stay at $12,000 per month. Calculate the breakeven point in
units for both hiking socks and sports socks.
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