A gourmet coffee shop currently sells 25,000 premium coffee cups annually at an average price of $5 each. It is considering adding a budget-friendly coffee option that sells for $3 each. The shop estimates it can sell 10,000 cups of the budget-friendly coffee, but by doing so, it will sell 4,000 fewer cups of the premium coffee. What is the total sales revenue that should be used when evaluating the addition of the budget-friendly coffee? A) $139,000 B) $142,000 C) $131,000 D) $135,000 E) $148,000.

A gourmet coffee shop currently sells 25,000 premium coffee cups annually at an average price of $5 each. It is considering adding a budget-friendly coffee option that sells for $3 each. The shop estimates it can sell 10,000 cups of the budget-friendly coffee, but by doing so, it will sell 4,000 fewer cups of the premium coffee. What is the total sales revenue that should be used when evaluating the addition of the budget-friendly coffee? A) $139,000 B) $142,000 C) $131,000 D) $135,000 E) $148,000.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 34P: Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming...

See similar textbooks

Similar questions

How much will the total revenue change if the new product line is introduced ?
How much will the total revenue change if the new product line is introduced ? Please solve this question
Sweet Tastings is considering increasing its selling price to $13 per case. Assuming production and sales decrease by 10%, calculate Sweet Tastings’ return on investment. Is increasing the selling price a good idea?
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 6,000. Consider requirements (b), (c), and (d) independently of each other. Required: What will the operating profit be? What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose 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?
The Chimes Clock Company sells a particular clock for $40. The variable costs are $23 per clock and the breakeven point is 230 clocks. The company expects to sell 280 clocks this year. If the company actually sells 430 clocks, what effect would the sale of additional 150 clocks have on operating income? Explain your answer. The sale of an additional 150 clocks would operating income by the amount of The total effect would amount to
Please help with the attached
MM Co. uses corrugated cardboard to ship its product to customers. Management believes it has found a more efficient way to package its products and use less cardboard. This new approach will reduce shipping costs from $10.00 per shipment to $9.25 per shipment. (1) If the company forecasts 1,200 shipments this year, what amount of total direct materials costs would appear on the shipping department’s flexible budget? (2) How much is this sustainability improvement predicted to save in direct materials costs for this coming year?
Please help me. Thankyou.
Reynold's Repair Shop has a monthly target profit of $54,000. Variable costs are 20% of sales, and monthly fixed costs are $18,000. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Reynold's margin of safety as a percentage of target sales. 3. Why would Reynold's management want to know the shop's margin of safety? Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. Select the labels and enter the amounts to compute Reynold's Repair Shop's monthly margin of safety in dollars. Margin of safety in dollars
Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows. Required: 1. What is Hammonds variable cost ratio? Its contribution margin ratio? 2. Suppose Hammonds actual revenues are 200,000 greater than budgeted. By how much will before-tax profits increase? Give the answer without preparing a new income statement. 3. How much sales revenue must Hammond earn in order to break even? What is the expected margin of safety? (Round your answers to the nearest dollar.) 4. How much sales revenue must Hammond generate to earn a before-tax profit of 130,000? An after-tax profit of 90,000? (Round your answers to the nearest dollar.) Prepare a contribution margin income statement to verify the accuracy of your last answer.
Keleher Industries manufactures pet doors and sells them directly to the consumer via their web site. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
Brahma Industries sells vinyl replacement windows to home improvement retailers nationwide. The national sales manager believes that if they invest an additional $25,000 in advertising, they would increase sales volume by 10,000 units. Prepare a forecasted contribution margin income statement for Brahma if they incur the additional advertising costs, using this information: