PLEASE NOTE! I ONLY NEED ANSWER TO QUESTION #7
Kate and Claire, recent college graduates, are unable to find suitable jobs in their field of accounting. However, each has been involved with a small business of their own for the last several years, and have been doing very well. Kate is a talented seamstress, and has designed a line of fashionable blazers that are selling for $500/each. Kate remains shocked at how fast the orders are coming in, and wonders if this could be something big. Claire also has a small but growing business. She manufactures synthetic leather belts that are selling for $50/each, and is similarly experiencing strong consumer interest. A few large retailers have started to place orders with both girls, and both are struggling to keep up with demand. Kate and Claire are wondering if they should combine their lines and start building the business together, since there is a high amount of overlap among their customers, and they could likely achieve some synergies by combining their marketing and customer service efforts. The belts go very well with the blazers. With a solid knowledge of their accounting basics, both have kept very thorough cost and marketing data. So they decided to pull it all together and analyze it.
Kate’s blazers – manufacturing data
# of Blazers |
Total Manufacturing Costs |
|
2019 |
400 |
$140,000 |
2018 |
350 |
130,000 |
2017 |
310 |
122,000 |
2016 |
240 |
108,000 |
2015 |
275 |
115,000 |
2014 |
250 |
106,000 |
Kate’s blazers – marketing data
# of Blazers |
Total Marketing Costs |
|
2019 |
400 |
$60,000 |
2018 |
350 |
55,000 |
2017 |
310 |
51,000 |
2016 |
240 |
44,000 |
2015 |
275 |
47,500 |
2014 |
250 |
45,000 |
Claire’s belts – manufacturing data
# of Belts |
Total Manufacturing Costs |
|
2019 |
1,700 |
$66,500 |
2018 |
1,400 |
56,000 |
2017 |
1,100 |
45,500 |
2016 |
1,000 |
42,000 |
2015 |
1,200 |
49,000 |
2014 |
900 |
38,500 |
Claire’s belts – marketing data
# of Belts |
Total Marketing Costs |
|
2019 |
1,700 |
$11,500 |
2018 |
1,400 |
10,000 |
2017 |
1,100 |
8,500 |
2016 |
1,000 |
8,000 |
2015 |
1,200 |
9,000 |
2014 |
900 |
7,500 |
DELIVERABLE:
Prepare a comprehensive report with the answers to each of the following questions. Provide all calculations in a well-organized manner, with the final answer for each part clearly stated in a complete sentence.
Total report should be between 2-3 pages.
QUESTIONS:
1. High-low cost estimation method
NOTE: The variable and fixed costs for each product line, blazers and belts, contain both a manufacturing and a marketing component. However, the data is recorded separately, which means FOUR separate high-low analyses must be conducted.
2. Cost-Volume-Profit (CVP) analysis, single-product
3. CVP, multiple-product setting
Merging the data together, it appears the sales mix is approximately 300 blazers and 1,200 belts each year.
For this CVP analysis, assume an additional $30,000 of combined fixed costs, this will be largely customer service costs.
4. Cost classification
5. Sensitivity CVP analysis and production versus period expenses – Multiple-Product Setting
6. Margin of Safety
7. Income statement
8. Degree of Operating Leverage
Contribution Format Income Statement | |||
Kate's Blazers | Claire's Belts | Total | |
Total Sales | $ 3,50,000 | $ 1,25,000 | $ 4,75,000 |
Less:Variable Costs | |||
Manufacturing costs[($140,000*1.05),($87,500*1.05)] | $ 1,47,000 | $ 91,875 | $ 2,38,875 |
Marketing Costs | $ 70,000 | $ 12,500 | $ 82,500 |
Total Variable Costs | $ 2,17,000 | $ 1,04,375 | $ 3,21,375 |
Contribution Margin | $ 1,33,000 | $ 20,625 | $ 1,53,625 |
Fixed Costs: | |||
Common Fixed costs | $ 30,000 | ||
Manufacturing costs[($60,000*1.05),($7,000*1.05)] | $ 63,000 | $ 7,350 | $ 70,350 |
Marketing Costs | $ 20,000 | $ 3,000 | $ 23,000 |
Total Fixed Costs | $ 83,000 | $ 10,350 | $ 1,23,350 |
Net Income | $ 50,000 | $ 10,275 | $ 30,275 |
The Operating Profit could be divided in the ratio of Individual Net Income of Kate and Claire.So the ratio should be 50000:10275 | |||
PLEASE NOTE! I ONLY NEED ANSWER TO QUESTION #7 Kate and Claire, recent college graduates, are...
PLEASE NOTE! I ONLY NEED ANSWER TO QUESTION #6 Kate and Claire, recent college graduates, are unable to find suitable jobs in their field of accounting. However, each has been involved with a small business of their own for the last several years, and have been doing very well. Kate is a talented seamstress, and has designed a line of fashionable blazers that are selling for $500/each. Kate remains shocked at how fast the orders are coming in, and wonders...
PLEASE NOTE! I ONLY NEED ANSWER TO QUESTION #5 Kate and Claire, recent college graduates, are unable to find suitable jobs in their field of accounting. However, each has been involved with a small business of their own for the last several years, and have been doing very well. Kate is a talented seamstress, and has designed a line of fashionable blazers that are selling for $500/each. Kate remains shocked at how fast the orders are coming in, and wonders...
PLEASE NOTE! I ONLY NEED ANSWERS TO QUESTION #8 Kate and Claire, recent college graduates, are unable to find suitable jobs in their field of accounting. However, each has been involved with a small business of their own for the last several years, and have been doing very well. Kate is a talented seamstress, and has designed a line of fashionable blazers that are selling for $500/each. Kate remains shocked at how fast the orders are coming in, and wonders...
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(ALL THE INFORMATION HERE IS THE INFORMATION I WAS PROVIDED BY THE PROFESSOR. I DO NOT HAVE ANY MORE INFORMATION BUT WHAT IS HERE) Kate and Claire, recent college graduates, are unable to find suitable jobs in their field of accounting. However, each has been involved with a small business of their own for the last several years, and have been doing very well. Kate is a talented seamstress, and has designed a line of fashionable blazers that are selling...
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Integrative Exercise Cost Behavior and Cost-Volume-Profit Analysis for Many Glacier Hotel Using the High-Low Method to Estimate Variable and Fixed Costs Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement its lodging revenue, the hotel decided in 20x1 to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. Due to the great success of...