Per Item Moderately Priced Designer $ 185 $ 87 Average sales price Average variable costs 105 22 80 65 Average contribution margin 20 10 Average fixed costs (allocated) $ 60 $ 55 Average operating income
Per Item Moderately Priced Designer $ 185 $ 87 Average sales price Average variable costs 105 22 80 65 Average contribution margin 20 10 Average fixed costs (allocated) $ 60 $ 55 Average operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Making sales mix decisions
Moore Company sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the following data:
The Moore Company store in Grand Junction, Colorado, has 14,000 square feet of Floor space. If Moore Company emphasizes moderately priced goods, it can display 840 items in the store. If Moore Company emphasizes designer wear, it can display only 560 designer items. These numbers are also the average monthly sales in units.
Prepare an analysis to show which product the company should emphasize.
Transcribed Image Text:Per Item
Moderately
Priced
Designer
$ 185
$ 87
Average sales price
Average variable costs
105
22
80
65
Average contribution margin
20
10
Average fixed costs (allocated)
$ 60
$ 55
Average operating income
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