(a)
Concept introduction:
Incremental analysis: It is a decision-making technique which is used in business to determine the true cost difference between alternatives.
To find:
The incremental profit for morning sky Inc. by addition of instruction materials.
(b)
Concept introduction:
Incremental analysis: It is a decision-making technique which is used in business to determine the true cost difference between alternatives.
To find:
If the MSI adds the instruction material or sell the CDs without them.
(c)
Concept introduction:
Incremental analysis: It is a decision-making technique which is used in business to determine the true cost difference between alternatives.
To find:
If the profit will increase or decrease if demand is reduced to
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Managerial Accounting
- 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' projected income. Revenue at market price Less: Total costs Operating incomearrow_forwardSnowDelight 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 SnowDelight 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 SnowDelight's projected income Revenue at market price Less: Total costs Operating income Requirements 1 If SnowDelight 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? 2 Assume SnowDelight has found ways to cut its fixed costs to $36.000,000 What is its new target variable cost per skier/snowboarder?arrow_forwardMaking outsourcing decisions Cool Systems manufactures an optical switch that it uses in its final product. The switch has the following manufacturing costs per unit: Another company has offered to sell Cool Systems the switch for $15.00 per unit. If Cool Systems buys the switch from the outside supplier, the idle manufacturing facilities cannot be used for any other purpose, yet none of the fixed costs are avoidable.</p><p>Prepare an outsourcing analysis to determine whether Cool Systems should make or buy the switch.arrow_forward
- Construct a cost-volume-profit chart indicating the break-even sales for the current year, assuming that a non-cancellable contract is signed for the additional billboard advertising. No changes are expected in the unit selling price or other costs. Verify your answer, using the break-even equation. I need the chart in graogh form for thisarrow_forwardLooking for the break-even point from the information provided. The Smiths need to develop an analysis of their breakeven point for the plastic display case based on sales of the product directly to the consumer as well as through retailers. If the product were sold to retailers, the price would have to provide retailers with an adequate markup. Exhibit C7.4 presents the expected cost structure for the Unique Display Cases display case developed by their accountant. Based on competitive prices, the Smiths expected to offer their product in direct to consumer sales for $24.99 plus $2.99 for shipping and handling. The price to retailers would have to be negotiated but would be 30–40% less to allow an adequate markup for the retail firms. The production cost of $7.50 was based on a production run of 5000 units in one color. At 10,000 or more units, production cost would drop to $5.75 per unit. The company that would produce the plastic unit had production capacity of 25,000 units a year.…arrow_forwardDirections: For each situation, select one option you think will help increase profit. Put the letter of your choice in the blank. Below each answer, write your rationale. When you have finished, ask your instructor for a copy of the answer guide to verify your responses. A. Avoid extra payroll expenses. B. Get the best rates on advertising. C. Change the product you provide. D. Use resources wisely. E. Beat the competition. F. Get the best rates on supplier purchases. G. Eliminate some free services. H. Increase worker e iciency. _1. A shop that sells fine glassware offers gift wrapping at no extra cost. Rationale: 2. Two stores sell the same video game at the same price. Rationale: 3. There are 12 places to buy the yarn needed for a knitting factory. Rationale: 4. Employees at a printing company do not have a system for completing their tasks quickly and accurately. Rationale: 5. At a sign-making company, the extra metal is discarded. Rationale:arrow_forward
- Conrad Coding Institute (CCI) offers online courses in coding. One of CCI's most popular courses is the introductory course that teaches basic coding skills. CCI prices this course aggressively, because of the potential for creating demand for the more advanced (and more profitable) courses. The Introductory coding course has the following price and cost characteristics: Tuition Variable costs (instruction, support, and so on) Fixed costs (advertising, salaries, and so on) Required: 4. Suppose that fixed costs for the year are 15 percent lower than projected, whereas variable costs per swuent are 15 percent higher than projected. What would be the operating profit/loss for the Introductory coding course for the year? Complete this question by entering your answers in the tabs below. Req A Req B Operating profit Req C1 Req C2 $ 65 per student 40 per student 180,000 per year Req C3 Show lessarrow_forwardThe Jabba Corporation manufactures the "Snack Buster" which consists of a wooden snack chip bowl with an attached porcelain dip bowl. Which of the following would be relevant in Jabba's decision to make the dip bowls or buy them from an outside supplier? Fixed overhead cost that can be eliminated if the bowls are purchased from the outside supplier The variable selling cost of the Snack Buster A) Yes Yes B) Yes No C) No Yes D) No No Multiple Choice Choice A Choice B Choice C Choice Darrow_forwardRefer to the information for Petoskey Company from Exercise 8-44. Assume that 20% of theAlanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskey, these customers would goelsewhere to purchase Alanson.Required:CONCEPTUAL CONNECTION Estimate the impact on profit that would result from droppingConway. Explain why Petoskey should keep or drop Conwayarrow_forward
- Carizick Co manufactures gaming products. It has created a new games console called the QpBox which is about to be launched. Demand for the QpBox is anticipated to be high. The product life cycle of the QpBox is expected to be three years with 300,000 units forecast to be sold during its first year. Sales volumes are expected to decrease by 75,000 units in each subsequent year. Production volumes will be based on expected demand levels. The following costs for the QpBox have been determined: Design and development Pre-launch advertising Advertising in Year 2 Packaging Manufacturing cost $120m $0.5m $0.4m $3 per unit $80 per unit At a recent board meeting, the finance director said that Carizick Co should look to maximise the profitability of the QpBox over its life cycle. The marketing director made the comment that Carizick Co should focus on extending the maturity phase of the life cycle only as this stage is where the QpBox is most profitable. Contract with Zone Co Carizick Co has…arrow_forwardThe jarvis corporation produces bucket loader assemblies for the tractor industry. The product has a long term life expectancy. Jarvis has a traditional manufacturing and inventory system. Jarvis is considering the installation of a just-in-time inventory system to improve its cost structure. In doing a full study using its manufacturing engineering team as well as consulting with industry JIT experts and the main vendors and suppliers of the components Jarvis uses to manufacture the bucket loader assemblies, the following incremental cost-benefit relevant information is available for analysis: The Jarvis cost of investment capital hurdle rate is 15%. One time cost to rearrange the shop floor to create the manufacturing cell workstations is $275,000. One time cost to retrain the existing workforce for the JIT required skills is $60,000. Anticipated defect reduction is 40%. Currently there is a cost of quality defect assessment listed as $150,000 per year. The setup time for…arrow_forwardCVP Analysis using a chart: The cost-volume-profit chart for Byron Manufacturing is shown. Use the graph to complete the sentences given below. SALES AND COSTS (Dollars) 20000 Sales 15000 Total Costs 10000 5000 100 200 300 400 500 600 700 800 900 1000 UNITS OF SALES Byron Manufacturing reaches its break-even level of activity when it sells 500 -v units and generates $12,000 v in revenue, because at this level of activity the firm's revenue equals -v its total cost. In addition, you can determine from the chart that Byron Manufacturing's fixed costs are $6,000 -v and its price per unit is $24.00 V and variable cost per unit is $12.00 If fixed costs increase, what will happen to the break-even point? The break-even point will increase. If the price per unit decreases, what will happen to the break-even point? The break-even point will increase.arrow_forward
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