![drivinghydra](/avatars/1671.jpg)
drivinghydra
10.03.2020 •
Business
The annual data that follow pertain to Sea Down There, a manufacturer of swimming goggles (the company had no beginning inventory):Sales Price $ 49Variable Manufacturing expense per unit $22Sales commission expense per unit $ 11Fixed Manufacturing overhead $2,760,000Fixed operating expenses $245,000Number of goggles produced $ 230,000Number of goggles sold $ 215,000(1) Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Sea Down There for the year.(2) Which statement shows the higher operating income? Why?(3) The company marketing vice president believes a new sales promotion that costs $ 150,000 would increase sales to 230,000 goggles. Should the company go ahead with the promotion? Give your reason.
Solved
Show answers
More tips
- A Animals and plants 10 Tips for Growing Delicious and High-Quality Tomatoes in Your Garden...
- H Health and Medicine Tick Traps: How to Remove Them Safely and Effectively...
- F Family and Home How to Keep Your Home Warm: Tips and Tricks...
- C Computers and Internet How Much Does an iPhone Cost in America?...
- S Style and Beauty Discover the Art of Nail Design: How Do You Paint Your Nails?...
- F Food and Cooking Discover How to Properly Prepare Dough for Rasstegai...
- F Family and Home Ways to Attract Wealth into Your Home...
- G Goods and services Stock center - a modern way of optimizing logistics...
- F Family and Home How to Teach Your Child to Read?...
- F Food and Cooking How to properly cook shrimp: tips from professionals...
Answers on questions: Business
- B Business A(n) designates the medium or media to be used, the specific vehicles, and the insertion dates of the advertising....
- B Business are responsible for developing operational plans. select one: a. lower-level managers b. middle managers c. board of directors d. top managers...
- B Business (02.01 LC) Which of the following is an example of an intergovernmental organization? Bank of Africa O Mid Florida Bank The World Bank O Royal Bank of Canada...
- B Business What school do you go tO QUICK HURRY...
- B Business d. Many of the employees of East Coast Yachts have shares of stock in the company because of an existing employee stock purchase plan. To sell the stock, the employees can tender...
- B Business Principal, Inc. is acquiring Secondary Companies for $38,000 in cash. Principal has 4,500 shares of stock outstanding at a market price of $31 a share. Secondary has 1,600 shares...
- B Business Marsh Corporation purchased a machine on July 1, 2015, for $1,500,000. The machine was estimated to have a useful life of 10 years with an estimated salvage value of $84,000. During...
- B Business Susan is considering adding toys to her gift shop. She estimates that the cost of inventory will be $6,500. The remodeling expenses and shelving costs are estimated at $2,800. Toy...
- B Business 5. A major distinction between a monopolistically competitive firm and an oligopolistic firm is that: A. One is a price taker and the other is a price maker. B. A recognized interdependence...
- B Business Rose Lever is a foreign exchange trader for a bank in New York. She observes the following rates: Spot exchange rate: SF0.9536/$ 3-month forward rate: SF0.9571/$ 3-month U.S. interest...
Ответ:
1. SEA DOWN
INCOME STATEMENT
conventional Variable
sales 10535000 10535000
cost of sales -7310000 - 4730000
commission - 2365000
contribution 3440000
gross profit 3225000
commission -2365000
fixed costs - 2760000
operating costs-245000 -245000
net income 615000 435000
2. Absorption method has the higher operating income, because manufacturing costs are charged to the cost of units and are usually less costly per unit ( the more units produced the lesser fixed costs become) than in total and in Variable method fixed costs are taken as a total.
3. conventional Variable
sales 11270000 11270000
cost of sales -7820000 -5060000
commission -2530000
contribution 3680000
gross profit 3450000
commission -2530000
fixed costs - 2760000
marketing cost-150000 -150000
operating costs-245000 -245000
net income 525000 525000
If the company is using Absorption method as basis for decision then it should not take the promotion as it yields to a decrease in net income. If the company uses Variable method as basis then it should take the promotion as it leads to an increase in profits.
Overall I think the company should take the promotion because it has an increased contribution to fixed costs and the two methods yield the same net income and that is a guarantee.
Explanation:
units
opening 0
produced 230000
closing - 15000
sold 215000
unit cost
ArbsoptionVariable
VC 2222
FIXED 12
UNIT COST 3422
Ответ:
b. a shadow price.
Explanation:
The shadow price is the predicted price for anything which can not be normally priced in the market. It is applied in the cost-benefit accounting to measure the intangible asset value also it could be use to reveal the actual price of the share of the money market
So the price that represent the true opportunity cost would be a shadow price