Quick Stop makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Quick Stop makes a variety of candies, the cost differences are insignificant, and the cases all sell for th same price. Quick Stop has a total capital investment of $16,000,000. It expects to produce and sell 550,000 cases of candy next year. Quick Stop requires a 12% target return on investment. Expected costs for ne year are: E (Click the icon to view the costs.) Quick Stop prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements. Kequirement 3. QUICK Stop IS considering increasıng its selling price to $15 per case. ASsuming proauction ana saies aecrease by b%, caicuiate QUICK Stop's return on investment. Is increasıng the selling price a good idea? Begin by calculating the new target operating income. Target revenues Data Table Variable costs Contribution margin Fixed costs Variable production costs $4.50 per case Tarnat oneratina income Variable marketing and distribution costs $2.00 per case Enter any number in the edit fields and then click Check Answer. Fixed production costs $1,405,000 Fixed marketing and distribution costs $600,000 parts 2 remaining Check Answer Other fixed costs $200,000
Quick Stop makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Quick Stop makes a variety of candies, the cost differences are insignificant, and the cases all sell for th same price. Quick Stop has a total capital investment of $16,000,000. It expects to produce and sell 550,000 cases of candy next year. Quick Stop requires a 12% target return on investment. Expected costs for ne year are: E (Click the icon to view the costs.) Quick Stop prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements. Kequirement 3. QUICK Stop IS considering increasıng its selling price to $15 per case. ASsuming proauction ana saies aecrease by b%, caicuiate QUICK Stop's return on investment. Is increasıng the selling price a good idea? Begin by calculating the new target operating income. Target revenues Data Table Variable costs Contribution margin Fixed costs Variable production costs $4.50 per case Tarnat oneratina income Variable marketing and distribution costs $2.00 per case Enter any number in the edit fields and then click Check Answer. Fixed production costs $1,405,000 Fixed marketing and distribution costs $600,000 parts 2 remaining Check Answer Other fixed costs $200,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Quick Stop makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Quick Stop makes a variety of candies, the cost differences are insignificant, and the cases all sell for the
same price. Quick Stop has a total capital investment of $16,000,000. It expects to produce and sell 550,000 cases of candy next year. Quick Stop requires a 12% target return on investment. Expected costs for next
year are:
(Click the icon to view the costs.)
Quick Stop prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital.
Read the requirements.
Requirement 3. Quick Stop is considerıng increasing its selling priIce to $15 per case. Assuming production and sales decrease by 6%, calculate QuIck Stop's return on investment. Is increasing the selling price a
good idea?
Begin by calculating the new target operating income.
Target revenues
Data Table
Variable costs
Contribution margin
Fixed costs
Variable production costs
$4.50 per case
Target oneratina income
Variable marketing and distribution costs $2.00 per case
Enter any number in the edit fields and then click Check Answer.
Fixed production costs
$1,405,000
Fixed marketing and distribution costs
$600,000
parts
remaining
Check Answer
Other fixed costs
$200,000
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