Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $14,850. The booth will be open 33 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $180 per package. She will continue to sell the existing product, EZRecords, which costs $92 per package. Ms. Ortega believes that the salesperson will spend approximately 23 hours selling EZRecords and 10 hours marketing ProOffice. Required a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 70 units of EZRecords and 46 units of ProOffice. b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 192 units of EZRecords and 104 units of ProOffice. Note: For all requirements, round "Cost per unit" to 2 decimal places. a. Total cost of sales a. Cost per unit b. Total cost of sales b. Cost per unit EZRecords ProOffice

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $14,850. The booth will be open 33 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $180 per package. She will continue to sell the existing product, EZRecords, which costs $92 per package. Ms. Ortega believes that the salesperson will spend approximately 23 hours selling EZRecords and 10 hours marketing ProOffice. Required a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 70 units of EZRecords and 46 units of ProOffice. b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 192 units of EZRecords and 104 units of ProOffice. Note: For all requirements, round "Cost per unit" to 2 decimal places. a. Total cost of sales a. Cost per unit b. Total cost of sales b. Cost per unit EZRecords ProOffice

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Requirement 1. Determine the number of tubs Marcus must sell per show to break even. Begin by…

A: Break-even point refers to a point at which the company earns neither profit nor deficit. If the…

Q: Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on…

A: Relevant cost is the cost which is relevant in decision making. Variable cost is relevant in…

Q: Assume that the account receivables for the end of the year is $150,000. Young entrepreneurs are…

A: The cash which has been received from accounts receivables which are factored depends upon two…

Q: Mike is considering adding a deli to his general store. The remodeling expenses and shelving costs…

A: Payback period It is a time the project will need for recovering the investment cost.

Q: Lorenzo, the owner of a local poster shop, comes to you for help. While his shop has been breaking…

A: Part 2: Explanation:Step 1: Calculate Breakeven Sales Units and Target Profit Goal: - Breakeven…

Q: You have been working for your cousin (owner of a Little Nero Caesar Salad franchise). The…

Q: Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 28,000 rolls annually…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Max Payne is CEO of Payne Publishing, which publishes accounting and other business textbooks. An…

A: Step 1 Highest Price per Text book is the net cost after savings in fixed cost to the Payne.

Q: Helen of Hamburgers by Helen would like to take advantage of the lucrative food truck restaurant…

A: Income statement includes expenses and revenue. Net profit is revenue minus expenses. We should…

Q: Ray Smith, a gift basket retailer, has stores in three shopping centres. The average selling price…

A: Break even sales is a point in total sales or the total amount of sales at which a company earns no…

Q: Bobwhite Laundromat is trying to enhance the services it provides to customers, mostly college…

A: Annual incremental revenue: $150,000Annual fixed cost: $77,000Variable cost: 5% of revenueUseful…

Q: Darlington Limited is considering implementing a new online employee recognition system that will…

A: Certainly! Let's go through the detailed workings and explanations to understand how we calculated…

Q: Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, to…

A: Contribution format of income statement that shows the expected net operating income each year…

Q: Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help…

A: Relevant cost: Any cost which is relevant to decision making. These costs are avoidable. Relevant…

Q: Straight-Line is a company that does land surveys and engineering consulting. They have an…

A: Break-even refers to the point at which the company has no profit/loss from the sale of a product or…

Q: After three years in the cake shop business, Gloria has decided she can now afford to advertise. An…

A: Breakeven is the point at which an entity is in a situation of no profit and no loss. At this point,…

Q: Abuela Pastries operates a chain of bakeries and is considering the sprinkle cookie project, which…

Q: ONE At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The…

A: Lets understand the basics. As the bottleneck the name suggest is a block of workflow in the…

Q: Gloria is planning on opening a cake shop. S has found a location that rents for $15,550 year and it…

A: Breakeven point is the point when the there is no profit or loss. This is when the contribution…

Q: Wantage Company makes decorative wedding cakes. The company is considering buying the cakes rather…

A: Variable costs are costs that varies with the change in the level of output whereas fixed costs are…

Q: Imagine you are a manager of a snack food company. You need to decide whether you should manufacture…

A: If new product is purchased instead of produced, it is going to be a sunk cost. The in advertising…

Q: CompanyX, a small (fictitious) company, is considering switching to the 2-year Acme2 battery for the…

A: Current cost refers to the costs being incurred in order to produce one single unit of a product.The…

Q: The firm paid $2,200,000 for the warehouse at that time. The owner, " Jack," (as the locals call…

A: Capital expenditure is the expense which is incurred for a long period of time. These expenses are…

Q: Id Norton accept the invi g income if the order is ose that Norton's distribr

A: When an entity working under capacity considers a special offer, it needs to consider the relevant…

Q: Joe Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc. to dispense frozen…

A: Income statement :— It is one of the financial statement that shows profitability, total revenue and…

Q: Abuela Pastries operates a chain of bakeries and is considering the sprinkle cookie project, which…

A: To find the operating cash flow (OCF) for year 1 of the sprinkle cookie project, we need to…

Q: Leo Consulting enters into a contract with Highgate University to restructure Highgate's processes…

A: The transaction price is the total amount of consideration or payment that a company expects to…

Question

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of
compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $14,850. The booth will be open 33
hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $180 per package. She will
continue to sell the existing product, EZRecords, which costs $92 per package. Ms. Ortega believes that the salesperson will spend
approximately 23 hours selling EZRecords and 10 hours marketing ProOffice.
Required
a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 70 units of
EZRecords and 46 units of ProOffice.
b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 192 units of
EZRecords and 104 units of ProOffice.
Note: For all requirements, round "Cost per unit" to 2 decimal places.
a. Total cost of sales
a. Cost per unit
b. Total cost of sales
b. Cost per unit
EZRecords
ProOffice

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!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introducing Cost Allocation

VIEW

Step 2: Statement Showing Allocation of Sales Person Cost to Each Product

VIEW

Step 3: Computation of Total Cost & Cost Per Unit In Case A

VIEW

Step 4: Computation of Total Cost & Cost Per Unit In Case B

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise: a. A suitable location in a large shopping mall can be rented for $3,400 per month. b. Remodeling and necessary equipment would cost $312,000. The equipment would have a 20-year life and a $15,600 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation. c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $370,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $77,000 per year for salaries, $4,200 per year for insurance, and $34,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 11.0% of sales. Required: 1. Prepare a contribution format income statement that shows the…
Xavi sells seashore paintings. His annual Fixed Costs are $1,000 and the Variable Costs are $8 per painting. Xavi is considering advertising his artwork in a local gallery, the cost of which is $80 per month. What would be the new annual breakeven revenue (in dollars) if he continues to sell his pieces for $15?
Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Chicago locations. The company expects that sales from the new 15-minute service will be $145,000 per year. Delta Sonic currently offers a 1-hour wash/wax/detail service with annual sales of $267,500. While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, Delta Sonic estimates that 10% of their 1-hour sales will be lost as a result of existing customers switching to the new, faster service. The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to O A. $171,750 B. $14,500 C. $145,000 O D. $26,750 O E. $118,250
Kayla's Kayaks is also evaluating the extension of credit to a new customer, Ray's River Guides. Kayla estimates that this new customer would add $50,000 in additional credit sales, with 5% likely to be uncollectible. She estimates that she will incur $5,000 in additional collection expenses. Kayla's production and marketing costs represent 65% of her sales and the company is in the 30% tax bracket. She will not need any other asset buildup to service this new customer. Kayla's average collection period is 90 days and she has an 8% desired return. Should Kayla accept this new customer? Please provide her with the applicable calculations to back up your recommendation. Additionally, if you recommend that she accept this new customer, please explain the risks of doing so, specifically in terms of the percentage estimates she has given to you. If you recommend that she not accept this new customer, please give Kayla some ideas about what she could do to make this proposition more…
Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 25,000 units of one of its most popular products. Grant currently manufactures 50,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $14 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units Manufacturing costs: Direct materials Direct labor Factory overhead Total manufacturing costs Unit cost 50,000 Required 2 Required 4 75,000 $ 200,000 250,000 350,000 $ 800,000 $ 1,125,000 $ 16 $15 Required: 2. What is the relevant cost per unit? What do ou think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is…
Lisa is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $14 for food costs per person per night. She feels she can increase the room rate to $101.00 per person per night. Determine the quantity of rentals and the sales revenue Lisa needs to break even if the changes are made. (Round answers to O decimal places, e.g. 5,275.)
Leo Consulting enters into a contract with Highgate University to restructure Highgate’s processes for purchasing goods from suppliers. The contract states that Leo will earn a fixed fee of $66,000 and earn an additional $13,000 if Highgate achieves $130,000 of cost savings. Leo estimates a 70% chance that Highgate will achieve $130,000 of cost savings. Assuming that Leo determines the transaction price as the expected value of expected consideration, what transaction price will Leo estimate for this contract? Transaction price for the contract ?
a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,450,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $230,000. She estimates that the return from owning her own shop will be $55,000 per year. She estimates that the shop will have a useful life of 6 years. c. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estimated to be 8 years. The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV. Should the company buy the new welding system? Yes 2. Conceptual Connection: Assuming a…
Lois is planning to make fancy, multi-tiered wedding cakes for the next wedding season. To make the cakes, she must invest $2900 in some special baking tools. To promote her business, she also needs to spend $6265 to advertise in the newspaper. She estimates that supplies and materials for each cake will cost $690. She is planning to set the price for each cake at $925. (a) Compute the contribution margin. (b) Compute the contribution rate. (c) Compute the break-even point in units. (d) Compute the break-even point in sales dollars. (a) The contribution margin per unit is $ (Type a whole number.) (b) The contribution rate is%. (Round to two decimal places as needed.) (c) The break-even point is cakes. (Round up to the nearest unit.) (d) The break-even point in sales dollars is $. (Type a whole number.)
Phlight Restaurant is considering a delivery service. The firm expects that sales from the new service will be $150,000 per year. Phlight currently offers a sit-down service with annual sales of $100,000. While many of the delivery sales will be to new customers, Phlight estimates that 60% of their current sit-down customers will switch and use the delivery service. The level of incremental sales associated with introducing the delivery service is closest to: Select one: a. $90,000 b. $150,000 c. $60,000 d. $120,000
Domestic
FEX, a grocery store, is considering offering one-hour photo developing in their store. The firm expects that sales from the new one-hour machine will be $139,000 per year. FEX currently offers overnight film processing with annual sales of $90,000. While FEX expects that many of the one-hour photo sales will be to new customers, it also expects that most of the old customers will switch to the new one-hour machine. Specifically, FEX estimates that 75% of their current overnight photo customers will switch and use the one-hour service. Given these expectations, the level of incremental sales associated with introducing the new one hour photo service is closest to O $206,500 O $36,300 O $71,500 $139,000 O $121,800 O $94,800