Question
In: Accounting
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors....
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics:
| Sales price | $ | 15 | per unit |
| Variable costs | 3 | per unit | |
| Fixed costs | 42,000 | per month | |
|
If that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? |
|||
Solutions
Expert Solution
Profit for the year will go UP by $2,700
Working
| Current | Proposed | Change | |
| Units | 5000 | 5000 | |
| Sales price | $ 15.00 | $ 15.00 | |
| Variable cost | $ 3.00 | $ 3.30 | |
| Fixed cost | $ 42,000.00 | $ 37,800.00 | |
| Sales revenue | $ 75,000.00 | $ 75,000.00 | |
| Variable costContribution margin | $ 15,000.00 | $ 16,500.00 | |
| Contribution margin | $ 60,000.00 | $ 58,500.00 | |
| Fixed cost | $ 42,000.00 | $ 37,800.00 | |
| Operating income | $ 18,000.00 | $ 20,700.00 | $ 2,700.00 |
ekkarill92 answered 1 year agoRelated Solutions
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors....
Warner Clothing is considering the introduction of a new
baseball cap for sales by local vendors. The company has collected
the following price and cost characteristics.
Sales price
$
17
per unit
Variable costs
3
per unit
Fixed costs
756,000
per year
Assume that the company plans to sell 7,000 units per month.
Consider requirements (b), (c), and (d)
independently of each other.
Required:
d. Suppose that fixed costs for the year are 10
percent lower than projected, and variable...
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors....
Warner Clothing is considering the introduction of a new
baseball cap for sales by local vendors. The company has collected
the following price and cost characteristics.
Sales price
$
17
per unit
Variable costs
3
per unit
Fixed costs
63,000
per month
Assume that the company plans to sell 7,000 units per month.
Consider requirements (b), (c), and (d)
independently of each other.
Required:
d. Suppose that fixed costs for the year are 10
percent lower than projected, and variable...
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors....
Warner Clothing is considering the introduction of a new
baseball cap for sales by local vendors. The company has collected
the following price and cost characteristics:
Sales price
$
15
per unit
Variable costs
5
per unit
Fixed costs
50,000
per month
Required:
a. What number must Warner sell per month to
break even?
b. What number must Warner sell per month to
make an operating profit of $34,000?
Assume that the company plans to sell 9,000 units per month....
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors....
Warner Clothing is considering the introduction of a
new baseball cap for sales by local vendors. The company has
collected the following price and cost characteristics:
Sales price$12per unitVariable
costs 2per unitFixed costs 40,000per month
Assume that the company plans to sell 6,000 units per
month. Consider requirements (b), (c), and (d)
independently of each other.
What is the impact on operating profit if variable
costs per unit decrease by 15 percent? Increase by 30
percent?
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics:
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics:
Sales price
$
16
per unit
Variable costs
4
per unit
Fixed costs
48,000
per month
2.
value:1.00 points
Required information
Required:
a. What number must Warner sell per month to break even?
b. What number must Warner sell per month to make an operating profit...
The company is considering the introduction of a new product that is expected to reach sales...
The company is considering the introduction of a new product
that is expected to reach sales of $10 million in its first full
year and $13 million of sales in the second and third years.
Thereafter, annual sales are expected to decline to two-thirds of
peak annual sales in the fourth year and one-third of peak sales in
the fifth year. No more sales are expected after the fifth year.
The CGS is about 60% of the sales revenues in...
Premium Company is considering the introduction of a new product that requires to purchase of a...
Premium Company is considering the introduction of a new product
that requires to purchase of a new industrial oven. The industrial
size oven will cost $960,000 and will be used for 5 years. The
company is in the 25% marginal tax bracket and has a required rate
of return of 11%. A once-off additional working capital requirement
of $35,000 is needed that will be liquidated at the end of year 5.
The accountant has forecasted that this oven would be...
A) A company is considering building a new factory to produce aluminum baseball bats. this project...
A)
A company is considering building a new factory to produce aluminum
baseball bats. this project would require an initial cash outlay of
$5,500,000 and would generate annual net cash inflows of $900,000
per year for seven years. calculate the projects NPVE using a
discount rate of 8%.
B)
The same company is considering to expand. The expidenture requires
$9,500,000 on new service equipment I would generate annual net
cash inflows from reduced costs of operations that equal 4 million...
Rump Industries is considering the purchase of a new production machine for $100,000. The introduction of...
Rump Industries is considering the purchase of a new production
machine for $100,000. The introduction of the machine will result
in an increase in earnings before interest and tax of $25,000 per
year. Set-up of the machine will involve installation costs of
$5,000 after-tax. Additionally, the machine will require workers to
undergo training that will cost the company $5,000 after-tax. An
initial increase in raw materials and inventory of $25,000 will
also be required. The machine has an expected life...
Derby Phones is considering the introduction of a new model of headphones with the following price...
Derby Phones is considering the introduction of a new model of
headphones with the following price and cost characteristics:
Sales price
$
23
per unit
Variable costs
6
per unit
Fixed costs
24,000
per month
Assume that the projected number of units sold for the month is
7,000. Consider requirements (b), (c), and
(d) independently of each other.
Required:
a. What will the operating profit be?
b. What is the impact on operating profit if
the sales price decreases by...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- UNIX ONLY -- DIFFICULT LAB ASSIGNMENT This is an extremely difficult subject for me. Could you...
- Do you know why your credit card can be refused even though you are profitable?
- The Following Java expression: S/10 * 10 + 10 – S = C Show that this...
- Year Cash Flow 0 −$9,700 1 5,800 2 2,500 3 3,400 &nb
- In a two – story building, an exterior column is to be designed for a service...
- Explain the use of neural networking modeling in predictive analytics. Discuss a real-life example of where...
- Boarder line and antisocial disorder are perhaps the most research personality disorder.What are the most common...
ADVERTISEMENT