Concept explainers
Differential Analysis for Sales Promotion Proposal
Kankakee Cosmetics Company is planning a one-month campaign for December to promote sales of one of its two cosmetics products. A total of $150,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign:
Moisturizer |
Perfume |
|||||
Unit selling price |
$35 |
$55 |
||||
Unit production costs: |
||||||
Direct materials |
$(12) |
$(20) |
||||
Direct labor |
(8) |
(10) |
||||
Variable factory |
(3) |
(6) |
||||
Fixed factory overhead |
(2) |
(6) |
||||
Total unit production costs |
$(25) |
$(42) |
||||
Unit variable selling expenses |
(2) |
(3) |
||||
Unit fixed selling expenses |
(2) |
(8) |
||||
Total unit costs |
$(29) |
$(53) |
||||
Operating income per unit |
$ 6 |
$ 2 |
No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 40,000 additional units of moisturizer or 30,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product.
Required:
- Prepare a differential analysis as of November 2 to determine whether to promote moisturizer (Alternative 1) or perfume (Alternative 2). If an amount is zero, enter "0".
Differential Analysis |
|||
Promote Moisturizer (Alt. 1) or Promote Perfume (Alt. 2) |
|||
November 2 |
|||
Promote |
Promote |
Differential |
|
Revenues |
$ |
$ |
$ |
Costs: |
|||
Direct materials |
|||
Direct labor |
|||
Variable factory overhead |
|||
Variable selling expenses |
|||
Sales promotion |
|||
|
$ |
$ |
$ |
Trending nowThis is a popular solution!
Step by stepSolved in 3 steps
- Please do not give solution in image format thankuarrow_forwardHome Depot Pleasanton Gardening Center needs to determine the ordering policy in the ERP system for a new retaining wall blocks. The demand forecast for the new blocks is about 1,000 units annually. To help you get a handle on the carrying and ordering costs, accounting department has given you the list of last year’s spending within warehouse and purchasing division. COST ITEM COST ($) COST ITEM COST ($) Taxes for the warehouse 2,000 Warehouse supplies 280 Receiving and incoming inspection 1,500 Research and development 2,750 New product development 2,500 Purchasing salaries & wages 30,000 Acct. Dept. costs to pay invoices 500 Warehouse salaries & wages 12,800 Inventory insurance 600 Pilferage of inventory 800 Product advertising 800 Purchase order supplies 500 Spoilage 750 Inventory obsolescence 300 Sending purchasing orders 800 Purchasing Dept. overhead 1,000 Accounting department…arrow_forwardthis is an excel style practice problemarrow_forward
- Make-or-Buy Decision Wisconsin Arts of Milwaukee employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, and other publications for the production. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $20.00 per layout page. The budget for the Publication Department is as follows: Salaries $180,000 Benefits 52,000 Supplies 34,000 Office expenses 21,000 Office depreciation 60,300 Computer depreciation 40,200 Total $387,500 The department expects to lay out 33,500 pages. The computers used by the department have an estimated residual value of $26,800. The Publication Department office space would be used for future administrative needs if the department's function were purchased from the outside. a. Prepare a differential analysis report for the make-or-buy decision, considering the…arrow_forwardShow work without plagiarism please i give up vote sir please I request no plagiarism please no plagiarism pleasearrow_forwardDo not give answer in imagearrow_forward
- Flow of Costs and Income Statement Ginocera Inc. is a designer, manufacturer, and distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $371,700 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $867,300 advertising the product through these infomercials. In addition, the company incurred $372,000 in legal costs. The knives were ready for manufacture on January 1, 20Y8. Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is as follows: Hardened steel blanks (used for knife shaft and blade) $1.40 Wood (for handle) 0.50 Packaging 0.50 The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of…arrow_forwardnprogress=false Print Item Sunrise Poles manufactures hiking poles and is planning on producing 3,800 units in March and 3,700 units in April. Each pole requires a half pound of material, which costs $1.00 per pound. The company's policy is to have enough material on hand to equal 10% of the next month's production needs and to maintain a finished goods inventory equal to 25% of the next month's production needs. What is the budgeted cost of purchases for March? Budgeted cost of purchases $ Previous Nexarrow_forwardDinesh bhaiarrow_forward
- Differential Analysis Report for Sales Promotion Proposal Rocket Shoe Company is planning a one-month campaiqn for August to promote sales of one of its two shoe products. A total of $176,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select f the campaign. Cross-Trainer Running Shoe Shoe Unit selling price $59 $65 Unit production costs: Direct materials $ (10) $(14) Direct labor (4) (5) Variable factory overhead (2) (4) Fixed factory overhead (6) (6) Total unit production costs $(22) $(29) Unit variable selling expenses (18) (17) Unit fixed selling expenses (10) (7) Total unit costs $(50) $(53) Operating income per unit $ 9 $ 12 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 28,000 additional units of cross-trainer shoes or 23,000 additional units of running shoes…arrow_forward1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate costs. If required, use a minus sign to indicate a loss. Differential Analysis Promote Tennis Shoes (Alt. 1) or Promote Walking Shoes (Alt. 2) June 19 Promote Promote Differential Tennis Shoes Walking Shoes (Alternative 1) (Alternative 2) (Alternative 2) Effects Revenues $4 Costs: Direct materials Direct labor Variable factory overhead Variable selling expenses Sales promotion Profit (loss)arrow_forwardPlease do not give solution in image format thankuarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education