Question

Rinaldo & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Rinaldo wants to be known for its trendsetting designs, and it wants every teenager to be seen in a distinctive Rinaldo T-shirt. Rinaldo presents the following data for its first two years of operations, 2016 and 2017 i (Click the icon to view the data.) - X More Info Read the requirements. Requirement 1.Calculate Rinaldo's operating 2017 2016 259,000 217,350 Number of T-shirts purchased 1 12,500 10,350 Number of T-shirts discarded Revenues 2. 246,500 207,000 Number of T-shirts sold (row 1-row 2) Costs 3 35.00 34.00 $ Direct material costs Average selling price 4 19.00 $ 17.00 $ 5 Average cost per T-shirt Administrative costs 4,650 4,900 Administrative capacity (number of customers) 6 Total costs 1,911,000 $ 1,860,000 $ 7 Administrative costs Operating income 390 $ 400 Administrative cost per customer (row 7/row 6) 8 Administrative costs depend on the number of customers Rinaldo has created capacity to support, not on the actual number of customers served. Rinaldo had 4,500 customers in 2016 and 4,400 customers in 2017 Choose from any list or enter any number in

Answer 1

	2016	2017
revenues ($34*207,000) ($35*246,500)	7,038,000	8,627,500
costs
direct material($19*217,350) ($17*259,000)	4,129,650	4,403,000
administrative costs	1,911,000	1,860,000
total costs	6,040,650	6,263,000
operating income	997,350	2,364,500

change in operating income is (2,364,500-997,350)=>$1,367,150 Favorable.