7 Sandra's Kreations just completed its best year, generating income of $28,000 from selling decadent wedding cakes and desserts. For abusiness that is only two years old and run from Sandra's own kitchen, this is quite an accomplishment. She has been asked to provide aspecial-event cake for one event per month at the local convention center, but at a reduced price of $430.While this is mostly fantastic news, Sandra realizes that she is already working at maximum capacity. If she commits to these events,she will need to either find additional capacity or reduce her regular wedding cake sales. The following income statement showsSandra's results from last year.SalesCOGSGross marginOperating expensesOperating income$200,000131,00069,00041,000$28,000Sandra's average selling price is $1,000 per cake; fixed-MOH costs are $67,000 and are included in COGS. All other product costs varybased on volume. Average variable operating expenses are $106 per cake; remaining operating expenses are fixed. After thinkingabout it further, she realizes she'll avoid the variable operating expenses on the special-event cakes. (c)Sandra would like to take on the special convention center events, but she is not willing to use her home for more than what she iscurrently using it, and she does not want to rent additional space. This means she will need to cut back on her regular sales by onecake per month for the next year. Given this scenario, what will her operating income be for next year?Total operating incomeToxtbook and Media$

As a part of analysis for accepting or rejecting the order, revenue and variable cost are compared…

Answered: Sandra's Kreations just completed its…

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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Susan's Kreations just completed its best year, generating income of $39,000 from selling decadent wedding cakes and desserts. For a business that is only two years old and run from Susan's own kitchen, this is quite an accomplishment. She has been asked to provide a special-event cake for one event per month at the local convention center, but at a reduced price of $410. While this is mostly fantastic news, Susan realizes that she is already working at maximum capacity. If she commits to these events, she will need to either find additional capacity or reduce her regular wedding cake sales. The following income statement shows Susan's results from last year. Sales COGS Gross margin Operating expenses Operating income $220,000 (a) 126,000 94,000 55.000 $39,000 Susan's average selling price is $1,000 per cake; fixed-MOH costs are $66,600 and are included in COGS. All other product costs vary based on volume. Average variable operating expenses are $109 per cake remaining operating…
Mary Smith is the owner and manager of a small bakery, “Mary’s Cookies”, which is known for its special gigantic almond-chocolate chip cookies. She has been offered a job by Cookie Monster, Inc., to come to work for them at $110,000 per year. Currently, she is producing her own cookies and she has revenues of $260,000 per year. Her costs are $10,000 for rent, $35,000 for ingredients, $5,000 for utilities, and $80,000 for wages, including $40,000 for Mary in concept of manager’s salary. She has $100,000 of her own money invested in the operation, which if she leaves, can be sold for $40,000 that she can invest at 8.2% per year. Using this information, calculate: Accounting profits = $ Economic profits = $ If instead, Mary pays herself no salary: Accounting profits = $ Economic profits = $
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Anny had been cutting hair for years and decided she wanted to open up a salon of her own. In order to do so, she knew she would need 3 new chairs at $1575 each; 3 mirrors at $199 each; 3 tables at $425 each; and the list went on - hairdryers, sinks, a cash register, etc. By the time she was finished, Anny's supplies totaled $7788.25, including sales tax. The supplier offered in-house financing of 24 monthly payments at $332.44 per month, with a 10% down payment. a) Find the amount financed, installment price, and the finance charge, presuming Anny goes with the financing available from her supplier.
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Rosemary is planning to make fancy multi-tiered wedding cakes for the next wedding season. To make the cakes, she must invest $742 in some special baking pans and tools. To get started, she needs to spend $2,130 to advertise in the newspaper. She estimates that supplies and materials for each cake will cost $56. She is planning to set the price for each cake at $561. a.) Calculate the contribution margin. b.) Calculate the contribution rate. (A percentage correct to 2 decimal places.) c.) Calculate the break-even point in units. (Round up to the next whole unit.) d.) Calculate the break-even point in sales dollars. (Use the rounded number of units.)
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