Jen and Barry's ice cream shop charges $1.45 for a cone. Variable expenses are $0.22 per cone, and fixed costs total $2,500 pmonth. A Valentine's Day promotion is being planned for the second week of February. During this week, a person buying a corat the regular price would receive a free cone for a friend. It is estimated that 650 additional cones would be sold and that 850cones would be given away. Advertising costs for the promotion would be $135.Required:a. Calculate the effect of the promotion on operating income for the second week of February.b. Do you think the promotion should occur?Complete this question by entering your answers in the tabs below.Required A Required BACalculate the effect of the promotion on operating income for the second week of February.Note: Do not round intermediate calculation and round your final answer to 2 decimal places.Netin operating incomeRequired ARequired B > Jen and Barry's ice cream shop charges $1.45 for a cone. Variable expenses are $0.22 per cone, and fixed costs total $2,500 permonth. A Valentine's Day promotion is being planned for the second week of February. During this week, a person buying a coneat the regular price would receive a free cone for a friend. It is estimated that 650 additional cones would be sold and that 850cones would be given away. Advertising costs for the promotion would be $135.Required:a. Calculate the effect of the promotion on operating income for the second week of February.b. Do you think the promotion should occur?Complete this question by entering your answers in the tabs below.Required ARequire BDo you think the promotion should occur?< Required A< Prev6 of 6Required BNext >

The contribution margin is calculated as the difference between sales and variable costs. For extra…

Answered: Jen and Barry's ice cream shop charges…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Jen and Barry’s ice cream shop charges $1.7 for a cone. Variable expenses are $0.31 per cone, and fixed costs total $2,100 per month. A Valentine’s Day promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 600 additional cones would be sold and that 700 cones would be given away. Advertising costs for the promotion would be $160. Required: a. Calculate the effect of the promotion on operating income for the second week of February. b. Do you think the promotion should occur?
Sunland, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $25 and are sold for $35. Glass pitchers cost $24 and are sold for $45. All other costs are fixed at $572,000 per year. Current sales plans call for 14,000 plastic pitchers and 28,000 glass pitchers to be sold in the coming year.
Rocky Mountain Waterpark sells half of its tickets for the regular price of $75. The other half goes to senior citizens and children for the discounted price of $35. Variable cost per guest is $15 for both groups, and fixed costs total $60,000 per month. What is Rocky Mountain’s breakeven point in total guests? Regular guests? Discount guests? 2,000; 1,000; 1,000 800; 400; 400 750; 375; 375 1,500; 750; 750
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The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Hooper $22.00 each with a minimum order of 400 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 50. Since Hooper's plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $44.00 each. Hooper would pay the students a commission of $5.00 for each shirt sold Required: 1. To make the project worthwhile, Hooper would require a $14,450 profit for the first three…
A hotel pays the phone company $200 per month plus $.15 for each call made. During January 7,000calls were made. In February 8,000 calls were made.Required:1. Calculate the hotel’s phone bills for January and February.2. Calculate the cost per phone call in January and in February.3. Separate the January phone bill into its fixed and variable components.4. What is the marginal cost of one additional phone call in January?5. What was the average cost of a phone call in January?
A real estate agent is considering changing her land line phone plan. There are three plans to choose from, all of which involve a monthly service charge of $20. Plan A has a cost of $.38 a minute for daytime calls and $.17 a minute for evening calls. Plan B has a charge of $.47 a minute for daytime calls and $.14 a minute for evening calls. Plan C has a flat rate of $75 with 275 minutes of calls allowed per month and a charge of $.36 per minute beyond that, day or evening. a. Determine the total charge under each plan for this case: 120 minutes of day calls and 40 minutes of evening calls in a month. b. If the agent will only use the service for daytime calls, over what range of call minutes will each plan be optimal? (Round your answer to the nearest whole number.) Plan A is optimal from zero to_________minutes. Plan C is optimal from____________minutes onward. c. Suppose that the agent expects both daytime and evening calls. At what point (i.e., percentage of total call minutes used…
Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound PER DAY. Lead time for each order is 3 days, and the pepperoni itself costs $3.00 per pound. Assume this store opens 365 days per year. 司 If she were to order 80 pounds of pepperoni at a time, how many orders per year would there be (do not round)? 365 O30.42 91.25 O 0.25
1) Margin at the Kiosk You rent a kiosk in the mall for $300 a month and use it to sell T-shirts with college logos from colleges and universities all over the world. You sell each T-shirt for $25, and your cost for each shirt is $15. You also pay your salesperson a commission of $0.50 per T-shirt sold in addition to a salary of $400 per month. Construct a contribution margin income statement for two different months: in one month, assume 100 T-shirts are sold, and in the other, assume 200 T-shirts are sold.
Betsy's Gift Baskets sells gift baskets, on average, for $125; each gift basket costs, on average, $60. Betsy pays salaries each month of $1,300 and her store rent is $1,000 per month. She also pays sales commissions of 5% of the sales price. In May, 140 gift baskets were sold. Required: a. Prepare a traditional income statement for the month of May. b. Prepare a contributio
A hotel pays the phone company $100 per month plus $.25 for each call made. During January 6,000 calls were made. In February 5,000 calls were made.Required:1. Calculate the hotel’s phone bills for January and February.2. Calculate the cost per phone call in January and in February. 3. Separate the January phone bill into its fixed and variable components.4. What is the marginal cost of one additional phone call in January?5. What was the average cost of a phone call in January?

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