10. The owners have set a target profit of $25,000 per month ($300,000 per year) in order for them to decide to devote themselves full time to JW Sports Supplies. Realizing from their projected incomestatements that their current predictions fall short of the $25,000, they want to evaluate the impact of alternative actions. Specifically, they want to evaluate each of the following factors, separately (in doingso, assume all other factors stay the same as projected in the income statement):What price must the company set to achieve a profit of $25,000 per month?What must the VC per unit be to achieve a profit of $25,000 per month?How many units must it sell to achieve a profit of $25,000 per month?What must total monthly FCs be to achieve a profit of $25,000 per month?11. The company is considering making a deluxe model. Its price would be $156, and its VC per unit would be $100, compared to a price of $100 and a VC of $60 for the basic model. It anticipates a sales mixof 60% basic model and 40% deluxe model. How many units of the basic model and how many units of the deluxe model must the company sell to break even?

Analyzing Profitability at JW Sports SuppliesThe prompt describes JW Sports Supplies evaluating…

Answered: 10. The owners have set a target profit…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The owner of a small printing company is considering the purchase of additional printing equipment to expand her business. If the owner expands the business and sales are high, projected profits (minus the cost of the equipment) should be $90,000; if sales are low, projected profits should be $40,000. If the equipment is not purchased, projected profits should be $70,000 if sales are high and $50,000 if sales are low. Consider Decision Tree Analysis If the owner is optimistic about the company's future sales, should the company expand by purchasing the equipment? Is the owner's optimism or pessimism about sales the only factor that may impact the company's profits?
1) CALCULATE THE B/C RATIO AND STATE WHETHER THE PROJECT IS WORTH DOING (YES/NO). Villa Homes wants to assess the profitability of a new project in which it builds a community center inside a growing neighborhood. Assume that the company leases the equipment it needs for $100,000, that the inflation rate is 4% and that the company expects to see a $200,000 annual profit increase over the next three years. Villa Homes can use the BCR formula to calculate the overall value of this new project.
Changes Analyze Operational Richmond's is a retail store with eight departments, including a garden department that has been operating at a loss. The following condensed income statement gives the latest year's operating results: Sales Cost of sales Gross profit Direct expenses Common expenses Total expenses Net income (Loss) Garden Department $336,000 201,600 134,400 108,000 48,000 156,000 $(21,600) % All other departments 0 All Other Departments $2,400,000 1,560,000 840,000 273,000 312,000 585,000 $255,000 a. Calculate the gross profit percentage for the garden department and for the other departments as a group. Garden department 0 % b. Suppose that if the garden department were discontinued, the space occupied could be rented to an
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Skiable Acres operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. (Click the icon to view the information.) Read the requirements. Requirement 1. If Skiable Acres cannot reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Complete the following table to calculate Skiable Acres's projected income. Revenue at market price Less: Total costs i More Info Operating income (Round the percentage to the nearest hundredth percent, X.XX%.) Investors would like to earn a 10% return on investment on the company's $270,000,000 of assets. Skiable Acres projects fixed costs to be $31,000,000 for the ski season. The resort serves about 725,000 skiers and snowboarders each season. Variable costs are about $13 per guest. Last year, due to its favorable reputation, Skiable Acres was a price-setter and was able to charge $3 more per lift ticket than…
The owner of a small printing company is considering the purchase of additional printing equipment to expand her business. If the owner expands the business and sales are high, projected profits (minus the cost of the equipment) should be $90,000; if sales are low, projected profits should be $40,000. If the equipment is not purchased, projected profits should be $70,000 if sales are high and $50,000 if sales are low. Consider Decision Tree Analysis Are there options other than the purchase of additional equipment that should be considered in making the decision to expand the business? The equipment to be purchased is known in the industry to have a useful life of five years. How might this impact the printing company?
Southern Sisters is considering Plan 1, which is estimated to have sales of $40,000 and costs of $15,000. The company currently has sales of $38,000 and costs of $14,000. Question: The incremental increase in profit if Plan 1 is selected is _______.
Sedgwick Inc. is considering Plan 1 which is estimated to have sales of $40,000 and costs of $15,500. The company currently has sales of $37,000 and costs of $14,000.Compare plans using incremental analysis. If Plan 1 is selected, there would be incremental decreaseincrease in profit by $ .
Bogart Company is considering two alternatives. Alternative A will have revenues of $160,000 and costs of $100,000. Alternative B will have revenues of $180,000 and costs of $125,000. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income.
The owner of a small printing company is considering the purchase of additional printing equipment to expand her business. If the owner expands the business and sales are high, projected profits (minus the cost of the equipment) should be $90,000; if sales are low, projected profits should be $40,000. If the equipment is not purchased, projected profits should be $70,000 if sales are high and $50,000 if sales are low. Are there options other than the purchase of additional equipment that should be considered in making the decision to expand the business? If the owner is optimistic about the company's future sales, should the company expand by purchasing the equipment? Is the owner's optimism or pessimism about sales the only factor that may impact the company's profits? The equipment to be purchased is known in the industry to have a useful life of five years. How might this impact the printing company?
Zenith Investment Company is considering the purchase of an office property. It has done an extensive market analysis and has estimated that based on current market supply or demand relationships, rents, and its estimate of operating expenses, annual NOI will be as follows: Year NOI 1 $ 1,030,000 2 1,030,000 3 1,030,000 4 1,210,000 5 1,260,000 6 1,310,000 7 1,349,000 8 1,389,170 A market that is currently oversupplied is expected to result in cash flows remaining flat for the next three years at $1,030,000. During years 4, 5, and 6, market rents are expected to be higher. It is further expected that beginning in year 7 and every year thereafter, NOI will tend to reflect a stable, balanced market and should grow at 3 percent per year indefinitely. Zenith believes that investors should earn a 12 percent return (r) on an investment of this kind.Required: a. Assuming that the investment is expected to produce NOI in years 1 to 8 and is expected to be owned for…
Padere's preliminary assumptions in her income statement is that there will be an overall increase in expenses next year. What is the next logical step for Padere before presenting to her COO? Select an answer: Each of the forecasting assumptions must be researched, supported, justified, and explained. No new steps are needed since the expected level of depreciation expense is tied to the expected level of property, plant, and equipment. Verify the forecasted increase in gross profit percentage is not impacted by changes in the competitive environment. No new steps are needed since the expected level of interest expense is tied to the expected level of loans.

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