Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $30. What would happen if she purchased the new oven torealize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decreasethe sales by only 25 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesn'tincrease the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.Round your answers to two decimal places. Round break-even units to a whole number.Selling Price, Variable Cost and Fixed Cost Change AnalysisSales Price per UnitVariable Cost per UnitContribution Margin per UnitFixed CostsBreak-even in UnitsBreak-even in DollarsSalesVariable CostsWith CurrentPrice$1.700.30Fixed Costs$1.40Net Income$420Unit Sales, Expected300$510Contribution MarginWith Decreased With Increased SP,VC andIncreased FC$$$$Decreased VC,and Increased FCMonthly Contribution Margin Income Statement$With CurrentPrice800With Decreased With Increased SP,VC andDecreased VC,Increased FCand Increased FC

Income Statement: An income statement helps organizations in calculating the profits or losses…

Answered: Kylie's Cookies is considering the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Jason is interested in finding the breakeven point for a new pump it plans to produce. The price of the pump is $250 and the variable cost ratio is 50% of the price. Jason calculated that the fixed costs will be about $400,000. What is the breakeven point of operations?
Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned incroase in production. The PJX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derok the following information. What is the IRR of the PJX5? #2 a. The PJX5 will cost $1.66 million fully instaled and has a 10 year life. It wll be depreciated to a book value of $257,124.00 and sold for that amount in year 10. b. The Engineering Department spent $48,616.00 researching the various juicers. a. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $18,897.00. d. The PJXS will reduce operating costs by $496,802.00 per yoar. 0. CSD's marginal tax rate is 31.00%. 1. CSD is 58.00% equity-financed. 9. CSD» 12.00-yoar, semi-annual pay, 6.63% coupon bond sells for $1,038.00. h. CSD's stock currently has a market value of $23.50 and Mr. Bensen believes the market estimates that dividends will grow at…
Please help me
Lisa is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $14 for food costs per person per night. She feels she can increase the room rate to $101.00 per person per night. Determine the quantity of rentals and the sales revenue Lisa needs to break even if the changes are made. (Round answers to O decimal places, e.g. 5,275.)
Mme. Giselle's boutique in Cleveland, Ohio is planning to sell a Parisian frock. If the public view it as being the latest style, the frocks will be worth $12,000. However, if the frocks are viewed as passe, they will be worth only $3,000. If the probability that they are stylish is 10%, what is the expected value of the frocks? The expected value of the frocks (EV) is EV $ (Enter your response rounded to two decimal places.)
Scarlett is considering the purchase of a new Wolf gas range by Sub-Zero Group, Inc. to increase the quality of the food served in her restaurant. It will also enhance the cooking experience for her and her chefs, as they won't have to fuss with the finicky electric burners they currently use. However, the new range is expensive. It will cost $9,920 to buy and properly install. On the upside, it should last for at least 7 years, at which time Scarlett may consider trading it in for another new range. While her operating costs will not decrease as a result of this purchase, Scarlett will be able to generate additional gross margin of at least $1,510 in the first year. After that, she expects the additional gross margin to grow by 10% each year for the next 4 years, at which point it will become stable for the remainder of the 7- year life. She believes the new range will be worth $1,010 at the end of this 7-year period. Her current range can be salvaged today for $250. Click here to…
Darren Mack owns the "Gas n' Go" convenience store and gas station. After hearing a marketing lecture, he realizes that it might be possible to draw more customers to his high-margin convenience store by selling his gasoline at a lower price. However, the "Gas n' Go' is unable to qualify for volume discounts on its gasoline purchases, and therefore cannot sell gasoline for profit if the price is lowered. Each new pump will cost $95,000 to install, but will increase customer traffic in the store by 13,000 customers per year. Also, because the "Gas n' Go" would be selling its gasoline at no profit, Darren plans on increasing the profit margin on convenience store items incrementally over the next five years. Assume a discount rate of 8 percent. The projected convenience store sales per customer and the projected profit margin for the next five years are given in the table below. i Year 1 23 $5 $5.50 $7 $9 $11 a. What is the NPV of the next five years of cash flows if Darren had four new…
K Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza that will be low in cholesterol and contain no trans fats. The firm expects that sales of the new pizza will be $24 million per year. While many of these sales will be to new customers, Pisa Pizza estimates that 30% will come from customers who switch to the new, healthier pizza instead of buying the original version. a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? b. Suppose that 40% of the customers who will switch from Pisa Pizza's original pizza to its healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this case? a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? The…
Caspian Sea Drinks is considering the purchase of a plum juicer – the PJX5. There is no planned increase in production. The PJX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derek the following information. What is the IRR of the PJX5? a. The PJX5 will cost $1.90 million fully installed and has a 10 year life. It will be depreciated to a book value of $158,307.00 and sold for that amount in year 10. b. The Engineering Department spent $11,647.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $22,370.00. d. The PJX5 will reduce operating costs by $440,567.00 per year. e. CSD’s marginal tax rate is 31.00%. f. CSD is 72.00% equity-financed. g. CSD’s 19.00-year, semi-annual pay, 6.57% coupon bond sells for $1,000.00. h. CSD’s stock currently has a market value of $24.80 and Mr. Bensen believes the market estimates that dividends will grow at…
Kate figures that based on her target ROS she will have to sell 20, 500 units of PickleKeeper, a storage unit for cucumbers. Kate sells the product direct to consumers for $0.59 and spends $ 0.29 per unit to manufacture and sell it. With fixed costs of $5,000, her target ROS % must be around 9.5%. (Round your answer to the nearest 50 units when choosing an option from below). Question 1 options: True False
McGilla Golf has decided to sell a new line of golf clubs and would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. The clubs will sell for $810 per set and have a variable cost of $410 per set. The company has spent $151,000 for a marketing study that determined the company will sell 55,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,600 sets of its high-priced clubs. The high-priced clubs sell at $1,110 and have variable costs of $710. The company will also increase sales of its cheap clubs by 11,100 sets. The cheap clubs sell for $450 and have variable costs of $235 per set. The fixed costs each year will be $9,110,000. The company has also spent $1,120,000 on research and development for the new clubs. The plant and equipment required will cost $28,770,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net…
Go Fly A Kite is considering making and selling custom kites in two sizes. The small kites would be priced at $12.00 and the large kites would be $25.00 The variable cost per unit is $5.80 and $12.60, respectively. Jill, the owner, feels that she can sell 3,350 of the small kites and 1,925 of the large kites each year. The fixed costs would be $2,120 a year and the depreciation expense is $1,650. The tax rate is 34 percent. What is the annual operating cash flow? Multiple Choice $28,063 $15,018 O $31224 $28.624 $30,023

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS