Differential Analysis for Sales Promotion Proposal Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $193,000 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: Tennis Walking Shoes Shoes Unit selling price $80 $88 Unit production costs: Direct materials $(14) $(19) Direct labor (5) (6) Variable factory overhead (3) (5) Fixed factory overhead (8) (10) Total unit production costs $(30) $(40) Unit variable selling expenses (25) (24) Unit fixed selling expenses (14) (9) Total unit costs $(69) $(73) Operating income per unit $11 $15 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 25,000 additional units of tennis shoes or 21,000 additional units of walking shoes could be sold without changing the unit selling price of either product. Required: 1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate costs. If required, use a minus sign to indicate a loss.
Differential Analysis for Sales Promotion Proposal Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $193,000 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: Tennis Walking Shoes Shoes Unit selling price $80 $88 Unit production costs: Direct materials $(14) $(19) Direct labor (5) (6) Variable factory overhead (3) (5) Fixed factory overhead (8) (10) Total unit production costs $(30) $(40) Unit variable selling expenses (25) (24) Unit fixed selling expenses (14) (9) Total unit costs $(69) $(73) Operating income per unit $11 $15 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 25,000 additional units of tennis shoes or 21,000 additional units of walking shoes could be sold without changing the unit selling price of either product. Required: 1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate costs. If required, use a minus sign to indicate a loss.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter
"0". Use a minus sign to indicate costs. If required, use a minus sign to indicate a loss.
Differential Analysis
Promote Tennis Shoes (Alt. 1) or Promote Walking Shoes (Alt. 2)
June 19
Promote
Promote
Differential
Tennis Shoes Walking Shoes
(Alternative 1) (Alternative 2) (Alternative 2)
Effects
Revenues
$4
Costs:
Direct materials
Direct labor
Variable factory overhead
Variable selling expenses
Sales promotion
Profit (loss)
Transcribed Image Text:Differential Analysis for Sales Promotion Proposal
Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $193,000 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:
Tennis
Walking
Shoes
Shoes
Unit selling price
$80
$88
Unit production costs:
Direct materials
$(14)
$(19)
Direct labor
(5)
(6)
Variable factory overhead
(3)
(5)
Fixed factory overhead
(8)
(10)
Total unit production costs
$(30)
$(40)
Unit variable selling expenses
(25)
(24)
Unit fixed selling expenses
(14)
(9)
Total unit costs
$(69)
$(73)
Operating income per unit
$11
$15
No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 25,000 additional units of tennis shoes or 21,000 additional
units of walking shoes could be sold without changing the unit selling price of either product.
Required:
1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter
"0". Use a minus sign to indicate costs. If required, use a minus sign to indicate a loss.
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