Required information Problem 5-26 (Algo) CVP Applications; Break-Even Analysis; Graphing [LO5-1, LO5-2, LO5-4, LO5-5] [The following information applies to the questions displayed below.] The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base salary. The following data pertains to Shop 48 and is typical of the company's many outlets: Selling price Variable expenses: Invoice cost Sales commission Total variable expenses Fixed expenses: Advertising Rent Salaries Total fixed expenses Per Pair of Shoes $ 40.00 $ 16.00 4.00 $ 20.00 Annual $ 45,000 31,000 155,000 $ 231,000 Problem 5-26 (Algo) Part 5 5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 55 cents commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48's net operating income (loss) if 13,550 pairs of shoes are sold? (Do not round intermediate calculations.)

Required information Problem 5-26 (Algo) CVP Applications; Break-Even Analysis; Graphing [LO5-1, LO5-2, LO5-4, LO5-5] [The following information applies to the questions displayed below.] The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base salary. The following data pertains to Shop 48 and is typical of the company's many outlets: Selling price Variable expenses: Invoice cost Sales commission Total variable expenses Fixed expenses: Advertising Rent Salaries Total fixed expenses Per Pair of Shoes $ 40.00 $ 16.00 4.00 $ 20.00 Annual $ 45,000 31,000 155,000 $ 231,000 Problem 5-26 (Algo) Part 5 5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 55 cents commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48's net operating income (loss) if 13,550 pairs of shoes are sold? (Do not round intermediate calculations.)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 63P: Special-Order Decision, Qualitative Aspects Randy Stone, manager of Specialty Paper Products...

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Required information Skip to question [The following information applies to the questions displayed below.] The Fashion Shoe Company operates a chain of women’s shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base salary. The following data pertains to Shop 48 and is typical of the company’s many outlets: Per Pair of Shoes Selling price $ 25.00 Variable expenses: Invoice cost $ 11.50 Sales commission 3.50 Total variable expenses $ 15.00 Annual Fixed expenses: Advertising $ 32,000 Rent 17,000 Salaries 110,000 Total fixed expenses $ 159,000 3. If 15,200 pairs of shoes are sold in a year, what would be Shop 48’s net operating income (loss)?
Data 1-2-3 is a top-selling electronic spreadsheet product. is about to release version 5.0. It divides its customers into two groups: new customers and upgrades customers (those who previously purchased Data 1-2-3, 4.0, or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs: New Customers Upgrade Customers Selling price $225 $125 Variable costs Manufacturing $30 $30 Marketing 65 95 15 45 Contribution margin $130 $80 The fixed costs of Data 1-2-3 5.0 are $16,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers.…
Ethics, CVP analysis. Megaphone Corporation produces a molded plastic casing, M&M101, formany cell phones currently on the market. Summary data from its 2017 income statement are as follows:Revenues $5,000,000Variable costs 3,250,000Fixed costs 1,890,000Operating income $ (140,000)Joshua Kirby, Megaphone’s president, is very concerned about Megaphone Corporation’s poor profitability.He asks Leroy Gibbs, production manager, and Tony DiNunzo, controller, to see if there are ways toreduce costs.After 2 weeks, Leroy returns with a proposal to reduce variable costs to 55% of revenues by reducingthe costs Megaphone currently incurs for safe disposal of wasted plastic. Tony is concerned that this wouldexpose the company to potential environmental liabilities. He tells Leroy, “We would need to estimate someof these potential environmental costs and include them in our analysis.” “You can’t do that,” Leroy replies.“We are not violating any laws. There is some possibility that we may have to…
Special-Order Decision, Qualitative Aspects Randy Stone, manager of Specialty Paper Products Company, was agonizing over an offer for an order requesting 5,000 boxes of calendars. Specialty Paper Products was operating at 70% of its capacity and could use the extra business. Unfortunately, the orders offering price of 4.20 per box was below the cost to produce the calendars. The controller, Louis Barns, was opposed to taking a loss on the deal. However, the personnel manager, Yatika Blaine, argued in favor of accepting the order even though a loss would be incurred. It would avoid the problem of layoffs and would help to maintain the companys community image. The full cost to produce a box of calendars follows: Later that day, Louis and Yatika met over coffee. Louis sympathized with Yatiks concerns and suggested that the two of them rethink the special-order decision. He offered to determine relevant costs if Yatika would list the activities that would be affected by a layoff. Yatika eagerly agreed and came up with the following activities: an increase in the state unemployment insurance rate from 1% to 2% of total payroll, notification costs to lay off approximately 20 employees, and increased costs of rehiring and retraining workers when the downturn was over. Louis determined that these activities would cost the following amounts: Total payroll is 1,460,000 per year. Layoff paperwork is 25 per laid-off employee. Rehiring and retraining is 150 per new employee. Required: 1. CONCEPTUAL CONNECTION Assume that the company will accept the order only if it increases total profits (without taking the potential layoffs into consideration). Should the company accept or reject the order? Provide supporting computations. 2. CONCEPTUAL CONNECTION Consider the new information on activity costs associated with the layoff. Should the company accept or reject the order? Provide supporting computations.
Special-Order Decision, Traditional Analysis, Qualitative Aspects Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special order for 4,000 pairs of weight-lifting gloves. Feinan Sports was not operating at capacity and could use the extra business. Unfortunately, the order’s offering price of $12.70 per pair was below the cost to produce them. The controller was opposed to taking a loss on the deal. However, the personnel manager argued in favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a pair of weight-lifting gloves is presented below. Direct materials $7.40 Direct labor 3.80 Variable overhead 1.60 Fixed overhead 3.10 Total $15.90 No variable selling or administrative expenses would be associated with the order. Non-unit-level activity…
EOQ for a retailer. The Cloth Center sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Cloth Center has collected the following information: Annual demand for denim cloth 20,000 yards Ordering cost per purchase order P160 Carrying cost per year 20% of purchase costs Safety-stock requirements None Cost of denim cloth P8 per year The purchasing lead time is 2 weeks. The Cloth Center is open 250 days a year (50 weeks for 5 days a week).1. Calculate the EOQ for denim cloth.2. Calculate the number of orders that will be placed each year3. Calculate the reorder point for denimcloth.
QT, Inc. and Elppa Computers, Inc. compete with each other in the personal computer market. QT assembles computers to customer orders, building and delivering a computer within four days of a customer entering an order online. Elppa, on the other hand, builds computers for inventory prior to receiving an order. These computers are sold from inventory once an order is received. Selected financial information for both companies from recent financial statements follows (in millions): QT Elppa Sales $35,040 $46,400 Cost of goods sold 29,200 43,800 Inventory, beginning of period 932 4,028 Inventory, end of period 1,132 4,828 a. Determine for both companies (1) the inventory turnover and (2) the number of days' sales in inventory. Round your calculations and answers to one decimal place. Assume 365 days a year. (refer to image) b. QT has a ______ (higher/lower) inventory turnover ratio than does Elppa Company. Likewise, QT has a _____ (larger/smaller) number…
A company is facing serious problems related to COVID 19, so it has to choose which segment to sacrifice due to the lack of funds needed for product manufacture and also limited working hours by the government. This company is engaged in fashion. Data on sales and expenses for the past quarter follow: Total Bag Watch Wallet Sales $470,000 $100,000 $250,000 ? Variable Manufacturing and Selling expense ? $35,000 ? $50,000 contribution margin $310,000 ? $175,000 $70,000 Fixed expenses Advertising, traceable $75,000 $15,000 $50,000 $10,000 Depreciation of special equipment $44,000 ? $14,000 $10,000 Salaries of product-line managers $39,000 $15,000 $12,000 $12,000 Allocated common fixed expenses ? $20,000 $25,000 $18,000 Total Fixed expenses $2210,000 ? $101,000 ? Net operating income (loss) ? $(5,000) ? $20,000 Management is…
Please answer questions 1 through 3. Please make the answers very clear and refer to the images attached.Notice that the first three questions require answers for Debbie, Trish, Sarah, Mike and Sewing Kit. Problem 11-25 (Algo) Volume Trade-Off Decisions [LO11-5, LO11-6] The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company’s products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data: Product Demand Next year (units) Selling Price per Unit Direct Materials Direct Labor Debbie 61,000 $ 20.00 $ 5.40 $ 3.60 Trish 53,000 $ 6.50 $ 2.20 $ 1.44 Sarah 46,000 $ 33.50 $ 8.09 $ 6.30 Mike 44,400 $ 14.00 $ 3.10 $ 4.50 Sewing kit 336,000 $ 9.10 $ 4.30 $ 0.99 The following additional information is available: The company’s plant has a capacity of 113,140 direct labor-hours per year on a single-shift basis.…
Pls answer this question with solutions. In 20x1, LUMINOUS SHINING Co. recalled a product due to a possible defect caused by malfunctioning factory equipment. The products recalled will be repaired free of charge. LUMINOUS is uncertain whether all products recalled will have the possible defect. However, the following estimate was made by LUMINOUS’s engineers and managerial accountants and approved by the board of directors. Repair cost Probability 80,000,000 5% 60,000,000 20% 40,000,000 35% 20,000,000 40% 100% How much is the provision to be recognized? a. 38Mc. 48M b. 50Md. 32M
E6.15 (LO 4), AN Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas’ owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Manual System Computerized SystemSales $1,500,000 $1,500,000Variable costs 1,200,000 600,000Contribution margin 300,000 900,000Fixed costs 100,000 700,000Net income $ 200,000 $ 200,000Instructions Determine the degree of operating leverage for each alternative.Which alternative would produce the higher net income if sales increased by $150,000?Using the margin of safety ratio, determine which alternative could sustain the greater decline in sales before…
Apples & Oranges Inc. is trying to become more efficient in shipping goods. It is experimenting with two new shipping procedure initiatives aimed at achieving this strategic objective. The company has provided the following data regarding the two procedures after one month of implementation: Line Item Description Shipping Procedure A Shipping Procedure B Number of shipping errors 144 120 Hours from ordered to shipped 17.3 20.2 Shipping time (hours from shipped to delivered) 6.7 9.5 Pounds of goods shipped 1,520,000 720,000 Number of shipments 400 300 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet a. Compute the following performance metrics for each…