1 - Sole Mates Inc. is planning a one-month campaign for July to promote sales o
ID: 2469705 • Letter: 1
Question
1 - Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $100,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign.
No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 7,000 additional units of tennis shoes or 7,000 additional units of walking shoes could be sold without changing the unit selling price of either product.
Required:
1. Prepare a differential analysis as of June 19, 2014, to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter zero "0".
2 - Product Decisions Under Bottlenecked Operations
a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production.
b. Prepare an analysis showing which product is the most profitable per bottleneck hour.
Hide1. Prepare a differential analysis as of June 19, 2014, to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero, enter zero "0".
Differential Analysis Promote Tennis Shoe (Alt. 1) or Promote Walking Shoe (Alt. 2) June 19, 2014 Promote Tennis Shoe (Alternative 1) Promote Walking Shoe (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $ $ $ Costs: Direct materials Direct labor Variable factory overhead Variable selling expenses Sales promotion Income (Loss) $ $ $
Explanation / Answer
Part 1)
The differential analysis is given below:
Based on the above calculations, Sole Mates Inc. should promote tennis shoes.
____________
Part 2)
a)
The table is given below:
____________
b)
The analysis is given below:
The most profitable product per bottleneck hour is Small.
Differential Analysis Promote Tennis Shoe (Alt. 1) or Promote Walking Shoe (Alt. 2) June 19, 2014 Promote Tennis Shoe (Alternative 1) Promote Tennis Shoe (Alternative 2) Differential Effect on Income (Alternative 2) Revenues 595,000 (7,000*85) 700,000 (7,000*100) 105,000 Costs Direct Materials 133,000 (7,000*19) 224,000 (7,000*32) 91,000 Direct Labor 56,000 (7,000*8) 84,000 (7,000*12) 28,000 Variable Factory Overhead 49,000 (7,000*7) 35,000 (7,000*5) -14,000 Variable Selling Expenses 42,000 (7,000*6) 70,000 (7,000*10) 28,000 Sales Promotion 100,000 1,00,000 0 Income (Loss) $215,000 $187,000 -$28,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.