Ch. 13 McDonald's, Inc. is considering adding a new restaurant. The restaurant, CosMc'swill offer standard McDonald's products in addition to other more eclectic offerings. Below isinformation on the potential financial impact to the company each month:SalesVariable expensesFixed manufacturing expensesFixed selling and administrative expenses$ 270,000$ 145,000$ 70,000$ 20,000In the company's accounting system all fixed expenses of the company are fully allocated toproducts. Further investigation has revealed that $15,000 of the fixed manufacturing expensesand all of the fixed selling and administrative expenses are avoidable and can be avoided ifthe company decides NOT to open the new chain. The financial advantage (disadvantage) forthe company of adding the new line would be:O $90,000$50,000$20,000$35,000

The income increases with increase ijn revenue. The income decreases with increase in costs.

Answered: Ch. 13- McDonald's, Inc. is considering…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 26BEA

See similar textbooks

Similar questions

i need the answer quickly
Required information [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $18 per unit. Variable expenses are $10.8 per unit, and fixed expenses total $48,280 per month. (Unless otherwise stated, consider each requirement separately.) Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a salary of $2,500 per month. g. 1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.95 per unit, assuming a sales volume of 7,400 units per month. 2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.95 per unit, assuming a sales volume of 8,600 units per month. h. 1. Assuming that the sales volume of 8,600 units per month…
A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
Need help with this problem (number 27). Need help with the blank data. Thanks!
46
1 Leander Office Products Inc. produces and sells small storage and organizational products for office use. During the first month of operations, the products sold well. Andrea Leander, the owner of the company, was surprised to see a loss for the month on her income statement. This statement was prepared by a local bookkeeping service recommended to her by her bank manager. The statement follows: 15 LEANDER OFFICE PRODUCTS INC. points Income Statement Sales (41,400 units) Skipped Variable expenses: Variable cost of goods sold* Variable selling and administrative expenses Contribution margin eBook Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses Operating loss. Print $264,960 $126,684 48,438 175,122 89,838 90,828 14,490 105,318 $(15,480) *Consists of direct materials, direct labour, and variable manufacturing overhead. Leander is discouraged over the loss shown for the month, particularly since she had planned to use the statement to encourage…
P6.6 An owner invested $180,000 in a new family-style restaurant, of which $160,000 was immediately used to purchase equipment and $20,000 was retained for working cash. Estimates for the first year of business are as follows: Menu selling prices to be established to give a markup of 150% over cost of food sold Variable wages, 28% of sales revenue I Fixed wages, $51,600 1 Other variable costs, 7% of sales revenue I Rent, $36,000 I Insurance, $4,800 Depreciation on equipment, 20% Return on investment desired, 12% Income tax rate, 30% The restaurant has 60 seats and is open 5 days a week for lunch and dinner only. Lunch sales revenue is expected to be 40% of total volume with 2 seat turnovers. Dinner revenue will be 60% of total volume, with 1.25 turnovers. Calculate the average check per meal period that will cover all costs, including desired return on investment.
Solaris Corporation prepared the following estimates for the four quarters of the current year: Sales Accounts Cost of goods sold Administrative costs Advertising costs Executive bonuses Provision for bad debts Annual maintenance costs Additional Information • • • • First Quarter Second Quarter Third Quarter Fourth Quarter $ 1,275,000 $ 1,530,000 $ 1,785,000 $ 2,040,000 434,000 514,000 500,000 280,000 584,000 285,000 634,000 295,000 0 140,000 0 0 0 0 104,000 0 0 0 78,000 0 0 60,000 0 First-quarter administrative costs include the $180,000 annual insurance premium. Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year. No special items affect income during the year. The company estimates an effective income tax rate for the year of 25 percent. Required: a. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year. b.…
2
Merton Electronics operates two retail outlets in Port Wren, one downtown and the other in Docklands. The stores share the use of a corporate staff responsible for functions such as personnel, IT, marketing, purchasing, and so on. The cost of the corporate activities for last year was $162,000. The following are the operating results for the two stores for the year: Downtown Docklands Sales revenue $ 720,000 $ 900,000 Number of employees 45 30 Required: Allocate the cost of the corporate activities to the two stores based on: Number of employees. store revenue.
Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below: Sales Variable expenses $ 730,000 $ 350,000 $ 234,000 $ 161,000 Fixed manufacturing expenses Fixed selling and administrative expenses In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be: $15,000 $143,000 O ($143,000) O ($15,000)
Godo

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS