Question

Question 3 of 15 -75 View Policies Current Attempt in Progress Fiesta Shirts produces two types of t-shirts -crew neck and v-neck. The variable cost of producing each crew neck shirt is $4.25, and $4.50 per shirt for each v-neck. Fixed costs per shirt are $1.50 per shirt when the production level is 12,000 of both types of shirts. The fixed cost is for factory costs including rent,depreciation, and insurance. Crew necks are currently sold for $7.00 each while v-necks are sold for $8.00 each. During the past year, the company has sold 12,000 of each type of shirt. The company estimates it can sell 14,000 crew neck shirts during the upcoming year if it reduces the selling price to $6.50 per shirt Prepare the incremental analysis to evaluate this situation for the coming year. (Enter incremental costs and loss amount with either e-signes. -15,000 or in parenthesis es. (15,000).) Incremental revenue Incremental cost Incremental profit/(loss) $ Should Fiesta Shirts reduce the selling price? Fiesta Shirts • reduce the selling price. Save for Later Attempts: 0 of 1 used Submit Answe MacBoost
Please answer all parts of the question.

Answer 1

working Note Conclusion particular Estimate Current. Sales. (A) [luorox 6.5 + 12000xe] [1200087 + 1200088 187000 18oooo y variable Cost (B) [Tuooox 4.25 +12000* 4.5) [12000 x 4.25 + 12000 x 4.5] 113500 losooo Contribution (A-13) 73500 75000 Incremettel Contribution New Estimate Current plan . 73500 75000 $ (1500) Loss
FIXED COST ARE NOT TO CHANGE SO IT WILL NOT THE PART OF CALCULATION .