The Food division of Garcia Company reports the following for the current year.SalesCost of goods soldGross profitExpensesIncomeGarcia wants to achieve at least a 10% profit margin next year. Two alternative strategies are proposed.Strategy 1: Increase advertising expenses by $225,000. The company expects this to increase sales by $660,000. Cost of goods soldwill not change.Strategy 2: Develop a more efficient manufacturing process. This will decrease cost of goods sold by $127,000.a. For each strategy, compute the profit margin expected for next year.b. Which strategy should Garcia choose based on expected profit margin?Complete this question by entering your answers in the tabs below.Required 1$ 4,180,0002,860,0001,320,0001,029,000$ 291,000RequiredStrategy 1Strategy 2For each strategy, compute the profit margin expected for next year.Note: Round your answers to one decimal place.Profit margin%%

Current year:Sales: $4,180,000Cost of Goods Sold (COGS): $2,860,000Gross Profit: Sales - COGS =…

Answered: The Food division of Garcia Company…

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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What is the margin, turnover and ROI if the existing company performs the same next year AND it adds the proposed investment? Paul company has the following data for its most recent year end: Sales $1,400,000 Variable Expenses $756,000 Contribution Margin $644,000 Fixed Expenses $410,000 NOI $234,000 AIso Paul is considering an investment in new equipment that willcost $250,000. The new equipment is projected to produce saIes of$420,000 and have variabIe costs of 60% of sales and fixed costs of$114,000.
1. If the company accepts this offer and rejects some business from regular customers so as not to exceed capacity, what would be the total net operating income next year? 2. If the company rejects the offer of the foreign distributor, how much is the opportunity cost?
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7. A company believes that if it spends $30,000 on an advertising campaign for one of its segments, there will be a 20% increment in the segment's sales. The contribution margin for the segment is 60% of sales. Sales for the segment are expected to be $400,000 before the advertising campaign. The relationship of costs to sales is expected to remain the same. The incremental net operating income if the advertising campaign is undertaken is expected to be: a. $48,000 b. $38,000 c. $18,000 d. $ 8,000 e. None of the above. The answer is Answer
What is the level of sales needed to obtain a 15% ROI of $8,250,000 for a restaurant and cover all the costs? (Condition: the restaurant has two main products, food and beverage) Food generates 75% of total sales and $3,000,000 in food sales with a 34% food cost. Beverage with a CMR of .80. Tax rate is 18% and fixed costs are $500,000 annually.
Kuzio Corporation produces and sells a single product. Data concerning that product appear below. Selling price Variable expenses Percent of Per Unit $ 130 78 $ 52 Sales 100% 60% 40% Contribution margin The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager belleves that a $5,000 Increase in the monthly advertising budget would result in a 140 unit increase in monthly sales volume. What should be the overall effect on the company's monthly net operating Income of this change? Multiple Choice Increase of $7,280 decrease of $2,280 Increase of $2,280 decrease of $5,000
Using this information below, answer the following question: What is the Net Income required? Total sales amount to $2,000,000 Food generates 75% of total sales Food cost is $500,000 Beverages generated sales of $300,000 with a CMR of 0.85 The gift store generated the remaining sales at a cost of 30% Tax rate is 27% Annual fixed costs total $1,500,000 Group of answer choices $1,080,000 $1,010,000 $1,000,000 $1,090,000
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A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 64.46% of sales, while fixed cost will be $450,000. The first year’s sales estimates are $1,285,245. Calculate the firm’s operating breakeven level of sales.
3) A shoe retailer plans, for the period, net sales of $3,000,000 with a 20% profit and 25% operating expenses. The anticipated markdowns are 15%, along with sales discounts at 2% and shortages of 3%. Cash discounts to be earned are estimated at 5%, and alterations are 1% of net sales. What initial markup % is needed for this retailer's merchandise to achieve the desired profit goal?
Bear Paints is a national paint manufacturer and retailer. (Click the icon to view additional information.) Assume that management has specified a 20% target rate of return. Read the requirements. Requirement 1. Calculate each division's ROI. First enter the formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, X.XX%.) Paint Stores Paint Stores Consumer Requirement 2. Calculate each division's sales margin. Interpret your results. Enter the formula, then calculate the sales margin for each division. (Enter the sales margin as a percent rounded to the nearest hundredth of a percentage, X.XX%.) Sales margin Consumer Interpret your results. The Paint Stores Consumer + The Paint Stores + Consumer + Division is more profitable on each dollar of sales. Requirement 3. Calculate each division's capital turnover. Interpret your results. First enter the formula, then calculate the capital turnover for each division.…
Task Lagenda Restaurant is a popular traditional Malay cuisine restaurant. Its owner has prepared the following forecast relating to the next financial year: Forecast profit statement Sales Less: cost of sales Gross profit Less: Variable costs Fixed costs Profit RM 20,000 16,000 Expected number of customers: RM 85,000 32,000 53,000 36,000 17.000 6,000 (a) Based on this information, prepare a break-even graph which clearly identifies the: break-even point (estimate) • margin of safety (estimate) profit area • loss area (b) Use the graph to estimate the profit/ loss from 4,000 customers.

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