Question

In: Accounting

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade...

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $16,770. The booth will be open 39 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $179 per package. She will continue to sell the existing product, EZRecords, which costs $105 per package. Ms. Ortega believes that the salesperson will spend approximately 29 hours selling EZRecords and 10 hours marketing ProOffice.

Required

  1. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 90 units of EZRecords and 51 units of ProOffice.

  2. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 209 units of EZRecords and 104 units of ProOffice.

(For all requirements, round "Cost per unit" to 2 decimal places.)

Solutions

Expert Solution

Question 1

Particulars EzRecords Pro Office
Total Cost 21,920 13,429
Cost per Unit 243.56 263.31
Particulars EzRecords Pro Office
Total Fixed Costs 16,770 16,770
Proportion of Fixed Costs 29/39 10/39
Fixed Costs 12,470 4,300
Particulars. EzRecords Pro Office
Units in Sales 90 51
* Cost per Unit 105 179
Total Purchases Cost 9,450 9,129
Particulars EzRecords Pro Office
Total Purchases Cost 9,450 9,129
Total Fixed Costs 12,470 4,300
Total Cost 21,920 13,429
Particulars EzRecords Pro Office
Total Costs 21,920 13,429
÷ Number of Units Sold 90 51
Cost per unit 243.56 263.31

Part B

Particulars EzRecords Pro Office
Total Cost 34,415 22,916
Cost per Unit 164.66 220.35
Particulars EzRecords Pro Office
Total Fixed Costs 16,770 16,770
Proportion of Fixed Costs 29/39 10/39
Fixed Costs 12,470 4,300
Particulars. EzRecords Pro Office
Units in Sales 209 104
* Cost per Unit 105 179
Total Purchases Cost 21,945

18,616

Particulars EzRecords Pro Office
Total Purchases Cost 21,945 18,616
Total Fixed Costs 12,470 4,300
Total Cost 34,415 22,916
Particulars EzRecords Pro Office
Total Costs 34,415 22,916
÷ Number of Units Sold 209 104
Cost per unit 164.66 220.35

Related Solutions

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade...
Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $9,250. The booth will be open 25 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $177 per package. She will continue to sell the existing product, EZRecords, which costs $101 per package. Ms. Garcia...
Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade...
Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $14,570. The booth will be open 31 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $176 per package. She will continue to sell the existing product, EZRecords, which costs $103 per package. Ms. Ortega...
Kathleen is considering expanding her dress shop. If interest rates rise she is
Kathleen is considering expanding her dress shop. If interest rates rise she is less likely to expand. This illustrates why the demand for loanable funds slopes downward. less likely to expand. This illustrates why the supply of loanable funds slopes downward. more likely to expand. This illustrates why the supply of loanable funds slopes upward. more likely to expand. This illustrates why the demand for loanable funds slopes upward.
A plumbing salesperson is looking at the sample items that she could take on her upcoming...
A plumbing salesperson is looking at the sample items that she could take on her upcoming sales trip. She has eight different faucets, fourteen different drain assemblies, and nineteen different towel bars. Her travel container can only hold eleven towel bars. How many different combinations of towel bars could she take?
Hannah is planning to purchase her first home. She has spoken to the bank who has...
Hannah is planning to purchase her first home. She has spoken to the bank who has advised that she qualifies for a 25 year mortgage of $1,400,000 at an annual percentage rate of 6%. Payments will be made monthly and therefore interest will be compounded monthly. a. What is the effective annual rate on this loan? Calculate her monthly payment. Prepare an amortization schedule for the first two months of the loan.   
Kerry Donovan plans on opening Donovan’s Fashion Designs. She is considering the various types of business...
Kerry Donovan plans on opening Donovan’s Fashion Designs. She is considering the various types of business organizations and wishes to organize her business with unlimited life and limited liability features. Additionally, Kerry wants the option to raise additional equity easily in the future. Requirements: Which type of business organization will meet Kerry’s needs best? Give arguments to support your answer. Name two other types of business organization and explain each.
Louise Layton plans to open​ Louise's Floral Designs. She is considering the various types of business...
Louise Layton plans to open​ Louise's Floral Designs. She is considering the various types of business organizations and wishes to organize her business with unlimited life and limited liability features. Which type of business organization will meet​ Louise's needs​ best? A. A partnership would have an indefinite life. B. The limited liability of a corporation would protect​ Louise's personal assets and provide an unlimited life to the business. C. The limited liability of a proprietorship would protect​ Louise's personal assets....
Marian Plunket owns her own business and is considering an investment. If she undertakes the​ investment,...
Marian Plunket owns her own business and is considering an investment. If she undertakes the​ investment, it will pay $5,560 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,390 plus an additional investment at the end of the second year of $6,950. What is the NPV of this opportunity if the interest rate is 2.1% per​ year? Should Marian take​ it? What is the NPV of this opportunity if the interest...
Marian Plunket owns her own business and is considering an investment. If she undertakes the​ investment,...
Marian Plunket owns her own business and is considering an investment. If she undertakes the​ investment, it will pay $5360 at the end of each of the next 3 years. The opportunity requires an initial investment of $1340 plus an additional investment at the end of the second year of $6700 . What is the NPV of this opportunity if the interest rate is 2.1% per​ year? Should Marian take​ it? What is the NPV of this opportunity if the...
Marian Plunket owns her own business and is considering an investment. If she undertakes the​ investment,...
Marian Plunket owns her own business and is considering an investment. If she undertakes the​ investment, it will pay $5,680 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,420 plus an additional investment at the end of the second year of $7,100. What is the NPV of this opportunity if the interest rate is 2.1% per​ year? Should Marian take​ it? What is the NPV of this opportunity if the interest...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT