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 $176,000 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 the campaign. Cross-Trainer Running Shoe Shoe Unit selling price S59 $65 Unit production costs: Direct materials $ (10) S(14) Direct labor Variable factory overhead (4) (5) (2) (4) Fixed factory overhead (6) (6) $(22) $(29) S/291 Total unit production costs Unit variable selling expenses (18) (17) Unit fixed selling expenses (10) (7) Total unit costs $(50) $(53) Operating income per unit $9 $ 12 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 28,000 additional units of cross-trainer shoes or 23,000 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 Sales promotion 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 $176,000 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 the campaign. Cross-Trainer Running Shoe Shoe Unit selling price S59 $65 Unit production costs: Direct materials $ (10) S(14) Direct labor Variable factory overhead (4) (5) (2) (4) Fixed factory overhead (6) (6) $(22) $(29) S/291 Total unit production costs Unit variable selling expenses (18) (17) Unit fixed selling expenses (10) (7) Total unit costs $(50) $(53) Operating income per unit $9 $ 12 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 28,000 additional units of cross-trainer shoes or 23,000 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 Sales promotion expenses Differential cost of proposals Net differential income from proposed sales promotion campaign
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Differential Analysis Report for Sales Promotion Proposal
Rocket Shoe Company is planning a one-month campaiqn for August to promote sales of one of its two shoe products. A total of $176,000 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 f
the campaign.
Cross-Trainer Running
Shoe
Shoe
Unit selling price
$59
$65
Unit production costs:
Direct materials
$ (10)
$(14)
Direct labor
(4)
(5)
Variable factory overhead
(2)
(4)
Fixed factory overhead
(6)
(6)
Total unit production costs
$(22)
$(29)
Unit variable selling expenses
(18)
(17)
Unit fixed selling expenses
(10)
(7)
Total unit costs
$(50)
$(53)
Operating income per unit
$ 9
$ 12
No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 28,000 additional units of cross-trainer shoes or 23,000 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
Sales promotion expenses
Differential cost of proposals
Net differential income from proposed sales promotion campaign
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