Differential Analysis Report for Sales Promotion Proposal Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $98,000 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. Cross-Trainer Running Shoe Shoe Unit selling price $70 $77 Unit production costs: Direct materials $ (13) $(17) Direct labor (4) (6) Variable factory overhead (3) (4) Fixed factory overhead (7) (8) Total unit production costs $(27) $(35) Unit variable selling expenses (23) (21) Unit fixed selling expenses (13) (8) Total unit costs $(63) $(64) Operating income per unit $7 $ 13 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 20,000 additional units of cross-trainer shoes or 17,000 additional units of running shoes could be sold without changing the unit selling pric either product. Required: 1. Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes. Rocket Shoe Company Proposals for Sales Promotion Campaign Differential Analysis Report Cross-Trainer Shoes Running Shoe Differential revenue from proposals Differential cost of proposals: Direct materials Direct labor Variable factory overhead Variable selling expenses Differential cost of proposals Net differential income from proposed sales promotion campaign
Differential Analysis Report for Sales Promotion Proposal Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $98,000 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. Cross-Trainer Running Shoe Shoe Unit selling price $70 $77 Unit production costs: Direct materials $ (13) $(17) Direct labor (4) (6) Variable factory overhead (3) (4) Fixed factory overhead (7) (8) Total unit production costs $(27) $(35) Unit variable selling expenses (23) (21) Unit fixed selling expenses (13) (8) Total unit costs $(63) $(64) Operating income per unit $7 $ 13 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 20,000 additional units of cross-trainer shoes or 17,000 additional units of running shoes could be sold without changing the unit selling pric either product. Required: 1. Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes. Rocket Shoe Company Proposals for Sales Promotion Campaign Differential Analysis Report Cross-Trainer Shoes Running Shoe Differential revenue from proposals Differential cost of proposals: Direct materials Direct labor Variable factory overhead Variable selling expenses Differential cost of proposals Net differential income from proposed sales promotion campaign
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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
Differential Analysis Report for Sales Promotion Proposal
(SEE ATTACHMENT FOR QUESTION OVERVIEW, I started, but it's probably wrong)
Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $98,000 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.
| Cross-Trainer Shoe |
Running Shoe |
|||
| Unit selling price | $70 | $77 | ||
| Unit production costs: | ||||
| Direct materials | $ (13) | $(17) | ||
| Direct labor | (4) | (6) | ||
| Variable factory |
(3) | (4) | ||
| Fixed factory overhead | (7) | (8) | ||
| Total unit production costs | $(27) | $(35) | ||
| Unit variable selling expenses | (23) | (21) | ||
| Unit fixed selling expenses | (13) | (8) | ||
| Total unit costs | $(63) | $(64) | ||
| Operating income per unit | $ 7 | $ 13 |
No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 20,000 additional units of cross-trainer shoes or 17,000 additional units of running shoes could be sold without changing the unit selling price of either product.
Required:
1. Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes.
Rocket Shoe Company
Proposals for Sales Promototion Campaign
Differential Analysis Report
| Cross-Trainer Shoes | Running Shoe | |
| Differential revenue from proposals | $ | $ |
| Differential cost of proposals: | ||
| a. (Choose from option below) | $ | $ |
| b. (Choose from option below) | ||
| c. (Choose from option below) | ||
| d. (Choose from option below) | ||
| e. (Choose from option below) | ||
| Differential cost of proposals | $ | $ |
| f. (Choose from option below) | $ | $ |
a. Options:
1. Direct materials
2. Fixed Factory overhead
3. Operating income per unit
4. Unit fixed selling expenses
5. Unit selling price
b. Options:
1. Direct labor
2. Fixed Factory overhead
3. Operating income per unit
4. Unit fixed selling expenses
5. Unit selling price
c. Options:
1. Variable factory overhead
2. Fixed Factory overhead
3. Operating income per unit
4. Unit fixed selling expenses
5. Unit selling price
d. Options:
1. Variable selling expenses
2. Fixed Factory overhead
3. Operating income per unit
4. Unit fixed selling expenses
5. Unit selling price
e. Options:
1. Sales promotion expenses
2. Fixed Factory overhead
3. Operating income per unit
4. Unit fixed selling expenses
5. Unit selling price
f. Options:
1. Net differential income from proposed sales promotion campaign
2. Net differential loss from proposed sales promotion campaign
2. The sales manager had tentatively decided to promote cross-trainer shoes, estimating that operating income would be increased by $123,000 ($13 operating income per unit for 17,000 units, less promotion expenses of $98,000). The manager also believes that the selection of running shoes will decrease operating income by $42,000 ($7 operating income per unit for 20,000 units, less promotion expenses of $98,000).
Should the sales manager’s tentative decision be accepted or opposed?
The sales manager’s tentative decision should be ____________ (Accepted/opposed) . The _________ (cross trainer shoe / running shoe) will contribute more to operating income than would be contributed by promoting the _____________ (cross trainer shoes / running shoes).
The sales manager’s tentative decision should be ____________ (Accepted/opposed) . The _________ (cross trainer shoe / running shoe) will contribute more to operating income than would be contributed by promoting the _____________ (cross trainer shoes / running shoes).
Transcribed Image Text:Differential Analysis Report for Sales Promotion Proposal
Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $98,000 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.
Cross-Trainer Running
Shoe
Shoe
Unit selling price
$70
$77
Unit production costs:
Direct materials
$ (13)
$(17)
Direct labor
(4)
(6)
Variable factory overhead
(3)
(4)
Fixed factory overhead
(7)
(8)
Total unit production costs
$(27)
$(35)
Unit variable selling expenses
(23)
(21)
Unit fixed selling expenses
(13)
(8)
Total unit costs
$(63)
$(64)
Operating income per unit
$ 7
$ 13
No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 20,000 additional units of cross-trainer shoes or 17,000 additional units of running shoes could be sold without changing the unit selling price of
either product.
Required:
1. Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes.
Rocket Shoe Company
Proposals for Sales Promotion Campaign
Differential Analysis Report
Cross-Trainer Shoes
Running Shoe
Differential revenue from proposals
Differential cost of proposals:
Direct materials
Direct labor
Variable factory overhead
Variable selling expenses
Differential cost of proposals
Net differential income from proposed sales promotion campaign
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education