The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.31 and fixed cost $72,120. Every dollar of sales contributes 31 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.69 and fixed costs of $552,920. E dollar of sales contributes 69 cents toward fixed costs and profit. Both companies have sales of $1,202,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's prof increase? Answer is complete but not entirely correct.

The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.31 and fixed cost $72,120. Every dollar of sales contributes 31 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.69 and fixed costs of $552,920. E dollar of sales contributes 69 cents toward fixed costs and profit. Both companies have sales of $1,202,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's prof increase? Answer is complete but not entirely correct.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 14E: Many different businesses employ markup on cost to arrive at a price. For each of the following...

See similar textbooks

Similar questions

The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.33 and fixed costs $109,620. Every dollar of sales contributes 33 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.67 and fixed costs of $584,640. Ever dollar of sales contributes 67 cents toward fixed costs and profit. Both companies have sales of $1,218,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures. Sales Variable cost Contribution margin Fixed costs Operating profit Dennis's Retail Mart's Amount Percentage % % % % % Oakfield Convenience Store Amount Percentage %…
The Greenback Store’s cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $38,500. Every dollar of sales contributes 30 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and fixed costs of $258,500. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $550,000 for the month. Required: a. Compare the two companies’ cost structures. b. Suppose that both companies experience a 20 percent increase in sales volume. By how much would each company’s profits increase?
The Greenback Store’s cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $113,400. Every dollar of sales contributes 45 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and fixed costs of $270,900. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $630,000 for the month. Required: a. Compare the two companies’ cost structures. b. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company’s profits increase? A. Compare the two companies’ cost structures. Greenback's Store One-Mart Amount Percentage Amount Percentage Sales % Variable Cost % Contribution margin % Fixed Costs %…
The Greenbeck Store's cost stucture is dominated by vaariable costs with a contribution margin ratio of 0.25 and fixed costs of $40,000. Every dollar of sales contributes .25 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.75 and fixed costs of $440,000. Every dollar of sales contributes 75 cents toward fixed costs and profit. Both companies have sales of $800,000 for the month. A. Compare the two comapnie's cost structures. B. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits increase?
Spring Company’s cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $50,000. Every dollar of sales contributes 30 cents toward fixed costs and profit. The cost structure of a competitor, Winters Company, is dominated by fixed costs with a higher contribution margin ratio of 0.80 and fixed costs of $300,000. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $500,000 per month. Required: a. Compare the two companies’ cost structures. b. Suppose that both companies experience a 20 percent increase in sales volume. By how much would each company’s profits increase?
Couzen's Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.28 and fixed costs of $517,500. Every dollar of sales contributes 28 cents toward fixed costs and profit. The cost structure of a competitor, Jones & Family, is dominated by fixed costs with a higher contribution margin ratio of 0.78 and fixed costs of $2,673,750. Every dollar of sales contributes 78 cents toward fixed costs and profit. Both companies have sales of $4,312,500 annually. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company's profits decrease? Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures. Couzen's Company Sales Variable cost Contribution margin Fixed costs Operating profit Amount Percentage % % % % % % % % % %
Jamison Company uses the total cost method of applying the cost-plus approach to product pricing. Jamison produces and sells Product X at a total cost of $800 per unit, of which $540 is product cost and $260 is selling and administrative expenses. In addition, the total cost of $800 is made up of $460 variable cost and $340 fixed cost. The desired profit is $168 per unit. Determine the markup percentage on total cost. %
Mallory Company uses the product cost method of applying the cost-plus approach to product pricing. It produces and sells Product X at a total cost of $35 per unit, of which $28 is product cost and $7 is selling and administrative expenses. In addition, the total cost of $35 is made up of $24 variable cost and $11 fixed cost. The desired profit is $8 per unit. Determine the markup percentage on product cost. Round your answer to one decimal place. %
Jamison Company uses the total cost method of applying the cost-plus approach to product pricing. Jamison produces and sells Product X at a total cost of $1,200 per unit, of which $820 is product cost and $380 is selling and administrative expenses. In addition, the total cost of $1,200 is made up of $680 variable cost and $520 fixed cost. The desired profit is $180 per unit. Determine the markup percentage on total cost.fill in the blank 1 %
Couzen's Company’s cost structure is dominated by variable costs with a contribution margin ratio of 0.27 and fixed costs of $513,000. Every dollar of sales contributes 27 cents toward fixed costs and profit. The cost structure of a competitor, Jones & Family, is dominated by fixed costs with a higher contribution margin ratio of 0.77 and fixed costs of $2,650,500. Every dollar of sales contributes 77 cents toward fixed costs and profit. Both companies have sales of $4,275,000 annually. Required: Compare the two companies’ cost structures. Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company’s profits decrease?
Spectrum Corp. makes two products: C and D. The following data have been summarized: (Click the icon to view the data.) Spectrum Corp. desires a 27% target gross profit after covering all product costs. Considering the total product costs assigned to the Products C and D, what would Spectrum have to charge the customer to achieve that gross profit? Round to two decimal places. Begin by selecting the formula to compute the amount that the company should charge for each product. Total product cost per unit Spectrum should charge 2091.10 for Product C. Data table Direct materials cost per unit Direct labor cost per unit Indirect manufacturing cost per unit Total costs assigned Print Product cost as a percentage of sales price Product C $ 900.00 $ 400.00 226.50 $ 1,526.50 $ Done Product D 2,400.00 100.00 531.00 3,031.00 X = Required sales price per unit G
Spectrum Corp. makes two products: C and D. The following data have been summarized: (Click the icon to view the data.) Spectrum Corp. desires a 25% target gross profit after covering all product costs. Considering the total product costs assigned to the Products C and D, what would Spectrum have to charge the customer to achieve that gross profit? Round to two decimal places. Begin by selecting the formula to compute the amount that the company should charge for each product. Required sales price per unit Data table Direct materials cost per unit Direct labor cost per unit Indirect manufacturing cost per unit Total costs assigned Print $ $ Product C 600.00 $ 300.00 270.00 1,170.00 S Done - X Product D 2,400.00 200.00 604.00 3,204.00