TinRoof, Inc., manufactures and sells a do-it- yourself storage shed kit. In 2016, it reported the following: I Units produced and sold 3,200 I Investment $2,400,000 % Markup percentage on full cost 8% ' Rate of return on investment 12% | Variable cost per unit $500 Required 1. What was TinRoof's operating income in 2016? What was the full cost per unit? What was the selling price? What was the percentage markup on variable cost? 2. TinRoof is considering increasing the annual spending on advertising by $175,000. The managers believe that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations.

TinRoof, Inc., manufactures and sells a do-it- yourself storage shed kit. In 2016, it reported the following: I Units produced and sold 3,200 I Investment $2,400,000 % Markup percentage on full cost 8% ' Rate of return on investment 12% | Variable cost per unit $500 Required 1. What was TinRoof's operating income in 2016? What was the full cost per unit? What was the selling price? What was the percentage markup on variable cost? 2. TinRoof is considering increasing the annual spending on advertising by $175,000. The managers believe that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations.

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

TinRoof, Inc., manufactures and sells a do-it-
yourself storage shed kit. In 2016, it reported
the following: Units produced and sold
3,200 I Investment $2,400,00O I Markup
percentage on full cost 8% ' Rate of return on
investment 12% | Variable cost per unit $500
Required 1. What was TinRoof's operating
income in 2016? What was the full cost per
unit? What was the selling price? What was
the percentage markup on variable cost? 2.
TinRoof is considering increasing the annual
spending on advertising by $175,000. The
managers believe that the investment will
translate into a 10% increase in unit sales.
Should the company make the investment?
Show your calculations.

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