Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $30. What would happen if she purchased the new oven torealize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decreasethe sales by only 25 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesn'tincrease the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.Round your answers to two decimal places. Round break-even units to a whole number.Selling Price, Variable Cost and Fixed Cost Change AnalysisSales Price per UnitVariable Cost per UnitContribution Margin per UnitFixed CostsBreak-even in UnitsBreak-even in DollarsSalesVariable CostsWith CurrentPrice$1.700.30Fixed Costs$1.40Net Income$420Unit Sales, Expected300$510Contribution MarginWith Decreased With Increased SP,VC andIncreased FC$$$$Decreased VC,and Increased FCMonthly Contribution Margin Income Statement$With CurrentPrice800With Decreased With Increased SP,VC andDecreased VC,Increased FCand Increased FC

Income Statement: An income statement helps organizations in calculating the profits or losses…

Answered: Kylie's Cookies is considering the…

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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Apple Incorporated, the worlds leading manufacturer of mobile phones, currently sells their cellphones for 90,000 per unit. This phone costs 60,000 to manufacture. Pineapple Company, the second leading manufacturer of cellphones, revealed that they would be unveiling a new model of phone that will sell for 70,000. This new phone contains all the features and performs at par with Apple’s phones. To keep up with the competition, Apple management believes that they should lower the price to 70,000. The Marketing Department also believes that the new price will cause sales to increase by 10% even with a new cellphone in the market. Apple currently sells 150,000 units of their phones annually. What is the target cost of Apple’s products if the target operating income is 20% of sales?
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Scarlett is considering the purchase of a new Wolf gas range by Sub-Zero Group, Inc. to increase the quality of the food served in her restaurant. It will also enhance the cooking experience for her and her chefs, as they won't have to fuss with the finicky electric burners they currently use. However, the new range is expensive. It will cost $9,920 to buy and properly install. On the upside, it should last for at least 7 years, at which time Scarlett may consider trading it in for another new range. While her operating costs will not decrease as a result of this purchase, Scarlett will be able to generate additional gross margin of at least $1,510 in the first year. After that, she expects the additional gross margin to grow by 10% each year for the next 4 years, at which point it will become stable for the remainder of the 7- year life. She believes the new range will be worth $1,010 at the end of this 7-year period. Her current range can be salvaged today for $250. Click here to…
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Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its online website. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (b) When is target costing particularly helpful in deciding whether to produce a given product?
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