Do Not Give Solution In Image Format And Fast Answering Please Pumped Up Kicks is a shoe manufacturing company that produces primarily athletic shoes. The companyis considering introducing a new athletic shoe. The company has the capacity to produce up to 30,000pairs of the new shoe per year. Company management is deciding between two possible new shoes.The "Foster" would be a court shoe and would have the following cost structure:Selling price per pairTotal variable costs per pairFixed production costsThe second possible new shoe would be called the "Ground Force 1" and would be a cross-training shoe.The Ground Force 1 would have the following cost structure:Selling price per pairTotal variable costs per pairFixed production costsQuestions:$140$80$150,000Producing either type of shoe will result in an additional $100,000 of fixed administrative costs. AssumePumped Up Kicks total statutory tax rate of 20 percent.2.$125$75$100,0001. Determine the number of pairs of Fosters or the number of pairs of Ground Force is thecompany must produce and sell to obtain an after-tax profit of $50,000. Assume the companywill produce only one of the two alternatives (i.e., the company will produce either Fosters orGround Force 1s, but not both).Which shoe (Fosters or Ground Force 1s) should the company produce if the company can sell18,000 pairs of Fosters or 18,000 pairs of Ground Force 1s?Determine the number of pairs of shoes produced and sold that would make the companyindifferent between producing Fosters and producing Ground Force 1s. In other words, find thenumber of pairs of shoes which, if produced and sold, would make the company the sameamount of after-tax profit, regardless of which product (Fosters or Ground Force 1s) thecompany chooses to produce. How much profit would the company be making at that level ofproduction and sales?3.4. Now, let's assume the company wants to consider producing both products. Assume that,considering forecasted sales and production factors, the company has decided on a product mixof 60% Ground Force 1s and 40% Fosters. What amount of sales (in dollars) must the companyobtain to break even with that product mix?

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Pumped Up Kicks is a shoe manufacturing company that produces primarily athletic shoes. The company
is considering introducing a new athletic shoe. The company has the capacity to produce up to 30,000
pairs of the new shoe per year. Company management is deciding between two possible new shoes.
The "Foster" would be a court shoe and would have the following cost structure:
Selling price per pair
Total variable costs per pair
Fixed production costs
The second possible new shoe would be called the "Ground Force 1" and would be a cross-training shoe.
The Ground Force 1 would have the following cost structure:
Selling price per pair
Total variable costs per pair
Fixed production costs
Questions:
$140
$80
$150,000
Producing either type of shoe will result in an additional $100,000 of fixed administrative costs. Assume
Pumped Up Kicks total statutory tax rate of 20 percent.
2.
$125
$75
$100,000
1. Determine the number of pairs of Fosters or the number of pairs of Ground Force is the
company must produce and sell to obtain an after-tax profit of $50,000. Assume the company
will produce only one of the two alternatives (i.e., the company will produce either Fosters or
Ground Force 1s, but not both).
Which shoe (Fosters or Ground Force 1s) should the company produce if the company can sell
18,000 pairs of Fosters or 18,000 pairs of Ground Force 1s?
Determine the number of pairs of shoes produced and sold that would make the company
indifferent between producing Fosters and producing Ground Force 1s. In other words, find the
number of pairs of shoes which, if produced and sold, would make the company the same
amount of after-tax profit, regardless of which product (Fosters or Ground Force 1s) the
company chooses to produce. How much profit would the company be making at that level of
production and sales?
3.
4. Now, let's assume the company wants to consider producing both products. Assume that,
considering forecasted sales and production factors, the company has decided on a product mix
of 60% Ground Force 1s and 40% Fosters. What amount of sales (in dollars) must the company
obtain to break even with that product mix?

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4. Now, let's assume the company wants to consider producing both products. Assume that, considering forecasted sales and production factors, the company has decided on a product mix of 60% Ground Force 1s and 40% Fosters. What amount of sales (in dollars) must the company obtain to break even with that product mix?

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Follow-up Question

Pumped Up Kicks is a shoe manufacturing company that produces primarily athletic shoes. The company is considering introducing a new athletic shoe. The company has the capacity to produce up to 30,000 pairs of the new shoe per year. Company management is deciding between two possible new shoes. The “Foster” would be a court shoe and would have the following cost structure:

Selling price per pair	$140
Total variable costs per pair	$80
Fixed production costs	$150,000

The second possible new shoe would be called the “Ground Force 1” and would be a cross-training shoe. The Ground Force 1 would have the following cost structure:

Selling price per pair	$125
Total variable costs per pair	$75
Fixed production costs	$100,000

Producing either type of shoe will result in an additional $100,000 of fixed administrative costs. Assume Pumped Up Kicks total statutory tax rate of 20 percent.

Questions:

Determine the number of pairs of Fosters or the number of pairs of Ground Force 1s the company must produce and sell to obtain an after-tax profit of $50,000. Assume the company will produce only one of the two alternatives (i.e., the company will produce either Fosters or Ground Force 1s, but not both).
Which shoe (Fosters or Ground Force 1s) should the company produce if the company can sell 18,000 pairs of Fosters or 18,000 pairs of Ground Force 1s?
Determine the number of pairs of shoes produced and sold that would make the company indifferent between producing Fosters and producing Ground Force 1s. In other words, find the number of pairs of shoes which, if produced and sold, would make the company the same amount of after-tax profit, regardless of which product (Fosters or Ground Force 1s) the company chooses to produce. How much profit would the company be making at that level of production and sales?
Now, let’s assume the company wants to consider producing both products. Assume that, considering forecasted sales and production factors, the company has decided on a product mix of 60% Ground Force 1s and 40% Fosters. What amount of sales (in dollars) must the company obtain to break even with that product mix?

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