jobs. The company estimates that revenue will increase by 40,000 over the next y
ID: 2370770 • Letter: J
Question
jobs.
The company estimates that revenue will increase by 40,000 over the next year as a result of the exhibit. For the previous year, profit was as follows:
Revenue $210,000
Less:
Design supplies $16,000
Salary of samantha spade (Owner) 82,000
Salary of kim (full time employee) 56,000
Rent 19,000
Utilities 7,000
Depreciation of office equipment 4,000
Printing of advertising materials 800
Advertising in middleton journal 3,000
Travel expenses other then depreciation of autos 2,500
Depreciation of company cars 10,000 200,300
Net income $9,700
Calculate the impact of the exhibit on company profit. Should the company exhibit at the home show?
Supplies as a percent of revenue Percentage
Travel as a percent of revenue ?Percentage?
Increase in revenue ?Amount?
Less:
Title? ?Amount?
Title? ?Amount?
Title? ?Amount?
Increase in profit ?Formula?
Title? ???????
__________________________________________________________________________________________
For most construction projects, Bradley Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for Kerry Park shopping mall to be as follows:
Materials $35,000
Labor to form ductwork 3,000
Labor to install ductwork 9,000
Misc. variable costs 1,500
Fixed costs allocated based on labor hours 3,000
Total costs $51,500
late fees.
Dont Buy Prefabricated Buy Prefabricated Buy Difference
Materials ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Total ?Formula? ?Formula? ?Formula?
Exercise E7-4 Incremental Analysis Rustic Interiors, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Middleton Home and Garden Expo. The exhibit will cost the company $13,000 for space. At the show, Rustic Interiors will present a slide show on a PC, pass out brochures that are printed previously, (the company printed more than needed), and show its portfolio of previousjobs.
The company estimates that revenue will increase by 40,000 over the next year as a result of the exhibit. For the previous year, profit was as follows:
Revenue $210,000
Less:
Design supplies $16,000
Salary of samantha spade (Owner) 82,000
Salary of kim (full time employee) 56,000
Rent 19,000
Utilities 7,000
Depreciation of office equipment 4,000
Printing of advertising materials 800
Advertising in middleton journal 3,000
Travel expenses other then depreciation of autos 2,500
Depreciation of company cars 10,000 200,300
Net income $9,700
Calculate the impact of the exhibit on company profit. Should the company exhibit at the home show?
Supplies as a percent of revenue Percentage
Travel as a percent of revenue ?Percentage?
Increase in revenue ?Amount?
Less:
Title? ?Amount?
Title? ?Amount?
Title? ?Amount?
Increase in profit ?Formula?
Title? ???????
__________________________________________________________________________________________
Problem P7-4 Make-or-Buy DecisionFor most construction projects, Bradley Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for Kerry Park shopping mall to be as follows:
Materials $35,000
Labor to form ductwork 3,000
Labor to install ductwork 9,000
Misc. variable costs 1,500
Fixed costs allocated based on labor hours 3,000
Total costs $51,500
The fixed costs relate to the company's building equipment, and office staff. The company plans on billing the Kerry Park developer $68,000 or services. Bradley is currently behind schedule on other projects and is paying a late penalty of $1,200 per day. Walt Bradley, the owner of Bradley Heating and Cooling, is considering ordering prefabricated ductwork for the Kerry Park job. The prefabricated ductwork will cost $40,000 (including the cost of sheet metal). If Walt buys the prefabricated ductwork, he'll be able to reassign workers to another project and avoid 5 days oflate fees.
Required: Should Bradley make the ductwork or buy it prefabricated?Dont Buy Prefabricated Buy Prefabricated Buy Difference
Materials ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Title ?Amount? ?Amount? ?Formula?
Total ?Formula? ?Formula? ?Formula?
Explanation / Answer
These are the only accounts that will change if they decide to show an exhibit.
. . . . . . . . . . . . . . . . .Current . . . . . .Expected
Revenue . . . . . . . . . . .210,000 . . . . . . 250,000
Change: 250,000 - 210,000 = $40,000
Less:
Exhibit . . . . . . . . . . . . . . . . . . . . . . . . .13,000
Change: $13,000
Design supplies . . . . . .16,000 . . . . . . . 19,048 (16,000 / 210,000) x 250,000
Change: 19,048 - 16,000 = $3,048
Travel expenses . . . . . . 2,500 . . . . . . . . 2,976 (2,500 / 210,000) x 250,000
Change: 2,976 - 2,500 = $476
Net income . . . . . . . . . .9,700 . . . . . . . 23,476 (40,000 - 13,000 - 3,048 - 476)
Since net income will be increased, the exhibit should be accepted.
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