### Differential Analysis#### Promote Moisturizer (Alt. 1) or Promote Perfume (Alt. 2)#### Date: August 21| | Promote Moisturizer (Alternative 1) | Promote Perfume (Alternative 2) | Differential Effect on Income (Alternative 2) ||----------------------------------|--------------------------------------|----------------------------------|-----------------------------------------------|| **Revenues** | | | || **Costs:** | | | || Direct materials | | | || Direct labor | | | || Variable factory overhead | | | || Variable operating expenses | | | || Sales promotion | | | || **Income (loss)** | | | |Parisian should promote the _______________.#### Key Essay Answer[Key essay answer here] **Differential Analysis for Sales Promotion Proposal***Objective: Determine which product, moisturizer or perfume, to promote in the September sales campaign for Parisian Cosmetics Company.*Parisian Cosmetics Company is planning a one-month campaign for September to promote sales of one of its two cosmetics products. A total of $140,000 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 | $55 | $60 || **Unit production costs:** | | || Direct materials | $9 | $14 || Direct labor | $3 | $5 || Variable factory overhead | $3 | $5 || Fixed factory overhead | $6 | $4 || **Total unit production costs** | $21 | $28 || Unit variable selling expenses | $16 | $15 || Unit fixed selling expenses | $12 | $6 || **Total unit costs** | $49 | $49 || **Operating income per unit** | $6 | $11 |**Analysis:**1. **Output and Facilities:** No increases in facilities would be necessary to produce and sell the increased output.2. **Sales Estimates:** - 22,000 additional units of moisturizer - 20,000 additional units of perfume Both can be sold from the campaign without changing the unit selling price of either product.**Instructions:**1. **Differential Analysis:** Prepare a differential analysis as of August 21 to determine whether to promote moisturizer (Alternative 1) or perfume (Alternative 2).2. **Decision Evaluation:** The sales manager had tentatively decided to promote perfume, estimating that operating income would be increased by $80,000 ($11 operating income per unit for 20,000 units less promotion expenses of $140,000). The manager also believed that the selection of moisturizer would reduce operating income by $8,000 ($6 operating income per unit for 22,000 units less promotion expenses of $140,000).

Answered: Image /qna-images/answer/5ec71cab-82dd-43a2-9f76-d295b0eb0838.jpg

1. Prepare a differential analysis as of August 21 to determine whether to promote mois- turizer (Alternative 1) or perfume (Alternative 2). 2. The sales manager had tentatively decided to promote perfume, estimating lyo that operating income would be increased by $80,000 ($11 operating income per for 20,000 units less promotion expenses of $140,000). The manager also believed that the selection of moisturizer would reduce operating income by $8,000 ($6 operating income per unit for 22,000 units less promotion expenses of $140,000). State briefly your reasons for supporting or opposing the tentative decision. unit

1. Prepare a differential analysis as of August 21 to determine whether to promote mois- turizer (Alternative 1) or perfume (Alternative 2). 2. The sales manager had tentatively decided to promote perfume, estimating lyo that operating income would be increased by $80,000 ($11 operating income per for 20,000 units less promotion expenses of $140,000). The manager also believed that the selection of moisturizer would reduce operating income by $8,000 ($6 operating income per unit for 22,000 units less promotion expenses of $140,000). State briefly your reasons for supporting or opposing the tentative decision. unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Tomperance, inc. is studying marketing cost and sales volume, and has generated the following information by use of a scatter diagram and a least sauares regression analysis Regression Aralyss $750 $43,000 Scater Dagram Variabie cost per Unt so Tocal mondhy fCd cost 541500 Tomporance is now proparing an cstmate for monthly sales of 19,000 units. On the basis of the data presonted, compute the most accurate salos forocast possibie. O An amount other than those listed above. O $I84300. S176.700. O S172.200. O S1700.
Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company's profits might be increased in the coming year. This problem asks you to use cost-volume-profit concepts to help Waterways understand contribution margins of some of its products and decide whether to mass-produce any of them. Waterways markets a simple water control and timer that it mass-produces. Last year, the company sold 635,000 units at an average unit selling price of $5.00. The variable costs were $2,222,500, and the fixed costs were $619,125. (a1) Your answer is correct. What is the product's contribution margin ratio? (Round ratio to O decimal places, e.g. 25%.) Contribution margin ratio 30 % (a2) eTextbook and Media Your answer is correct. What is the company's break-even point in sales units and in sales dollars for this product? Break-even point in units 412750 units Break-even point in…
need help please
The new chief executive officer (CEO) of Richard Manufacturing has asked for a variety of information about the operations of the firm from last year. The CEO is given the following information, but with some data missing: (Click the icon to view the variety of operations information.) Read the requirements, Requirement 1. Find (a) total sales revenue, (b) selling price, (c) rate of return on investment, and (d) markup percentage on full cost for this product. (a) The total sales revenue is (Round your answer to the nearest cent.) (b) The selling price per unit is (Round the retum on investment to the nearest whole percent, X%.) (c) The rate of return on investment is (d) Calculate the markup percentage on full cost for this product. (Round your intermediary calculations to the nearest cent and the markup to the nearest hundredth percent XXX%) The markup percentage on full cost for this product is Requirement 2. The new CEO has a plan to reduce fixed costs by $200,000 and variable…
Please help to solve the question by giving the correct answers and explanation. Thank you!. please answer all
Assume that a general economic downturn occurred during year 2, with product demand falling from 6,000 to 5,000 units. Determine the percentage decrease in company net income if Consolidated had adopted Plan A.
Please do not give solution in image format ? And Fast Answering Please ? And Explain Proper Step by Step.
Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company's profits might be increased in the coming year. This problem asks you to use cost-volume-profit concepts to help Waterways understand contribution margins of some of its products and decide whether to mass-produce any of them. Waterways markets a simple water control and timer that it mass-produces. Last year, the company sold 735,000 units at an average unit selling price of $3.60. The variable costs were $1,852,200, and the fixed costs were $508,032.
By using the comparative income approach, calculate the dropping of GlassGlobe segment. Justify whether Excess Earth Company should retain or drop the segment.
Bear Paints is a national paint manufacturer and retailer. (Click the icon to view additional information.) Assume that management has specified a 20% target rate of return. Read the requirements. Requirement 1. Calculate each division's ROI. First enter the formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, X.XX%.) Paint Stores Paint Stores Consumer Requirement 2. Calculate each division's sales margin. Interpret your results. Enter the formula, then calculate the sales margin for each division. (Enter the sales margin as a percent rounded to the nearest hundredth of a percentage, X.XX%.) Sales margin Consumer Interpret your results. The Paint Stores Consumer + The Paint Stores + Consumer + Division is more profitable on each dollar of sales. Requirement 3. Calculate each division's capital turnover. Interpret your results. First enter the formula, then calculate the capital turnover for each division.…
a) Calculate the contribution margin per unit.b) Calculate the number of units Beauty Supplies Company must sell each year to break even.c) Calculate the number of units Beauty Supplies Company must sell to yield a profit of $160,000.d) Managers may use Sensitivity analysis in their accounting system.i) What is sensitivity analysis? ii) How is Sensitivity analysis useful to managers?