The owner enjoys the used-book business. Any suggestions as how to turn this int
ID: 2473012 • Letter: T
Question
The owner enjoys the used-book business. Any suggestions as how to turn this into a full-time business venture so the owner can quit his other job? Prepare another income statement to support your idea.
Data Given.
I need to the below data to be put in excel to answer the questions. Not sure how to do it? Prepare a segmented variable costing (behavioral) income statement for the company in good format. Prepare a second variable costing statement assuming 90% of all the books in each category purchased were actually sold. Prepare a third variable costing statement assuming that the price is increased by 50% for all five categories (use original sales information).The owner enjoys the used-book business. Any suggestions as how to turn this into a full-time business venture so the owner can quit his other job? Prepare another income statement to support your idea.
Data Given.
Units Sold 2,000 1,000 500 400 400 Units Purchased 3,000 1,200 1,000 1,000 1,000 Resale Price $4.00 $15.00 $25.00 $45.00 $40.00 Cost $0.50 $5.00 $10.00 $20.00 $20.00 Variable operating expenses Shipping per book $1.50 Fixed expenses Internet-related costs $5,000 Travel, etc. 2,000 Advertising 1,000 Other overhead 3,000Explanation / Answer
Thus he can maximise his contribution and net income (fixed costs are fixed/same for all the sales mixes)
by choosing his sales -mix according to the ranking of contribution - can also avoid the less-ranked product - if the market for the high-ranked ones are sure and certain.
Segmented variable costing (behavioral) income statement Book Category I II III IV V Units Sold 2,000 1,000 500 400 400 Resale Price 4 15 25 45 40 Total Sale Value 8000 15000 12500 18000 16000 Less: Variable costs: Cost 0.5 5 10 20 20 Total cost 1000 5000 5000 8000 8000 Shipping costs@1.50 3000 1500 750 600 600 Total Variable costs 4000 6500 5750 8600 8600 Contribution Margin 4000 8500 6750 9400 7400 Total contribution 36050 Less Fixed expenses 11000 Net Income 25050Related Questions
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