A shoemaker desires to achieve a profit of P50,000 by selling 500 pairs of shoes. The fixed cost inproducing the product is P70,000 while the variable cost per pair of shoes is P300. Determine theappropriate price per pair which will achieve the desired profit of the shoemaker.

Contribution Margin Ratio: A company's contribution margin ratio, also known as the CM ratio, is…

Answered: A shoemaker desires to achieve a profit…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)
Diamond Boot Factory normally sells its specialty boots for $31 a pair. An offer to buy 100 boots for $25 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $11, and special stitching will add another $2 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization. Income Should Diamond Boot Factory accept or reject the special offer? Accept the special offer.
Planck, the new owner of the vehicle accessory shop, is considering buying sets of winter tyres for $ 299 per set and selling each set at $ 520. Fixed costs related to this operation amount to $ 3250 per month. It is expected that 18 sets per month could be sold. How much profit will Planck make each month? Round to the nearest one. Hint: use the contribution margin approach.

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A shoemaker desires to achieve a profit of P50,000 by selling 500 pairs of shoes. The fixed cost in producing the product is P70,000 while the variable cost per pair of shoes is P300. Determine the appropriate price per pair which will achieve the desired profit of the shoemaker.