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Yoga, Spa, and Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $35,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be $12,800,000 for the year. About 520,000 members are expected to swim each year. Variable costs are about $11 per swimmer. The club is a price-taker and won't be able to charge more than its competitors who charge $39 for a membership. What profit (loss) will it earn in terms of dollars? OA. $7,599,961 OB. $1,760,000 OC. $(1,760,000) OD. $12,800,000

Yoga, Spa, and Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $35,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be $12,800,000 for the year. About 520,000 members are expected to swim each year. Variable costs are about $11 per swimmer. The club is a price-taker and won't be able to charge more than its competitors who charge $39 for a membership. What profit (loss) will it earn in terms of dollars? OA. $7,599,961 OB. $1,760,000 OC. $(1,760,000) OD. $12,800,000

FINANCIAL ACCOUNTING
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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Yoga, Spa, and Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $35,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be $12,800,000 for the year. About 520,000 members are expected to swim each year. Variable costs are about $11 per swimmer. The club is a price-taker and won't be able to charge more than its competitors who charge $39 for a membership. What profit (loss) will it earn in terms of dollars? O A. $7,599,961 OB. $1,760,000 OC. $(1,760,000) OD. $12,800,000 The following information relates to current production of outdoor wicker sofas at Backyard Posh: Variable manufacturing costs per unit Total fixed manufacturing costs Variable marketing and administrative costs per unit Total fixed marketing and administrative costs O A. Decrease by $44,400 OB. Increase by $24,400 OC. Increase by $44,400 O D. Decrease by $24,400 The regular selling price per wicker sofa is $310. The company is analyzing the opportunity to accept a special sales order for 400 wicker sofas at a price of $250 per unit. Fixed costs would increase by $20,000. The company has the capacity to produce 15,000 wicker sofas per year, but is currently producing and selling 12,000 wicker sofas per year. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected? Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) G Lantern Company has three product lines: D, E, and F. The following information is available: D E $84,000 $42,000 $42,000 O A. Decrease $11,000 OB. Increase $28,000 O C. Increase $39,000 O D. Increase $11,000 $12,000 $30,000 $105 $525,000 $34 $270,000 ….. $46,000 $24,000 $22,000 $15,000 $7,000 C F Lantern Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Lantern Company discontinues product line F and rents the space formerly used to produce product F for $19,000 per year, what affect will this have on operating income? $20,000 $12,000 $8,000 $17,000 $(9,000)
Transcribed Image Text:Yoga, Spa, and Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $35,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be $12,800,000 for the year. About 520,000 members are expected to swim each year. Variable costs are about $11 per swimmer. The club is a price-taker and won't be able to charge more than its competitors who charge $39 for a membership. What profit (loss) will it earn in terms of dollars? O A. $7,599,961 OB. $1,760,000 OC. $(1,760,000) OD. $12,800,000 The following information relates to current production of outdoor wicker sofas at Backyard Posh: Variable manufacturing costs per unit Total fixed manufacturing costs Variable marketing and administrative costs per unit Total fixed marketing and administrative costs O A. Decrease by $44,400 OB. Increase by $24,400 OC. Increase by $44,400 O D. Decrease by $24,400 The regular selling price per wicker sofa is $310. The company is analyzing the opportunity to accept a special sales order for 400 wicker sofas at a price of $250 per unit. Fixed costs would increase by $20,000. The company has the capacity to produce 15,000 wicker sofas per year, but is currently producing and selling 12,000 wicker sofas per year. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected? Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) G Lantern Company has three product lines: D, E, and F. The following information is available: D E $84,000 $42,000 $42,000 O A. Decrease $11,000 OB. Increase $28,000 O C. Increase $39,000 O D. Increase $11,000 $12,000 $30,000 $105 $525,000 $34 $270,000 ….. $46,000 $24,000 $22,000 $15,000 $7,000 C F Lantern Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Lantern Company discontinues product line F and rents the space formerly used to produce product F for $19,000 per year, what affect will this have on operating income? $20,000 $12,000 $8,000 $17,000 $(9,000)
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