Kauffman Market has a gross profit percentage of 40%. It is expecting an additional $3,000 in revenues over the upcoming 3-day holiday weekend. The manager would like 3 additional staff members assisting customers during this busy time. The additional staff members will each work one 6-hour shift per day and earn $12 per hour. Would it be profitable for Kauffman Market to add the extra staff members? By how much? a.No, by $(1,392) b.Yes, by $984 c.Yes, by $2,352 d.Yes, by $552

Kauffman Market has a gross profit percentage of 40%. It is expecting an additional $3,000 in revenues over the upcoming 3-day holiday weekend. The manager would like 3 additional staff members assisting customers during this busy time. The additional staff members will each work one 6-hour shift per day and earn $12 per hour. Would it be profitable for Kauffman Market to add the extra staff members? By how much? a.No, by $(1,392) b.Yes, by $984 c.Yes, by $2,352 d.Yes, by $552

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....

See similar textbooks

Similar questions

Now assume that it is several years later. The brothers are concerned about the firm’s current credit terms of net 30, which means that contractors buying building products from the firm are not offered a discount and are supposed to pay the full amount in 30 days. Gross sales are now running $1,000,000 a year, and 80% (by dollar volume) of the firm’s paying customers generally pay the full amount on Day 30; the other 20% pay, on average, on Day 40. Of the firm’s gross sales, 2% ends up as bad-debt losses. The brothers are now considering a change in the firm’s credit policy. The change would entail: (1) changing the credit terms to 2/10, net 20, (2) employing stricter credit standards before granting credit, and (3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to pay the full amount after only 20 days. The brothers believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm—after all, the discount amounts to a price reduction. Of course, these customers would take the discount and hence would pay in only 10 days. The net expected result is for sales to increase to $1,100,000; for 60% of the paying customers to take the discount and pay on the 10th day; for 30% to pay the full amount on Day 20; for 10% to pay late on Day 30; and for bad-debt losses to fall from 2% to 1% of gross sales. The firm’s operating cost ratio will remain unchanged at 75%, and its cost of carrying receivables will remain unchanged at 12%. To begin the analysis, describe the four variables that make up a firm’s credit policy and explain how each of them affects sales and collections.
Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Sales price $ 128.00 per service Variable costs 90.00 per service Fixed costs 124,982 per year Cruse Cleaning is subject to an income tax rate of 22 percent. Required: How many cleaning services must Cruse Cleaning sell in a year to break even? How many cleaning services must Cruse Cleaning sell in a year to earn an annual operating profit of $34,086 after taxes?
Olsen Auto Supply typically earns a contribution marginratio of 40 percent. The store manager estimates that by spending an additional $5,000 per month for radio advertis-ing the store will be able to increase its operating income by $3,000 per month. The manager is expecting the radioadvertising to increase monthly dollar sales volume by:a. $12,500. c. $7,500.b. $8,000. d. Some other amount.
A newly opened food chain estimates to serve 200 customers a day, with an average consumption or basket size of P150. The establishment operates 25 days a month. Fixed cost for operational expenses at P25,000 a month while labor and material cost is P120 per customer served. Determine if the establishment is profitable, how much is the daily profit? How many customers per day must be served to break-even? Note: Put Final Answer in the yellow box
Problem: Suppose you are the Director of Human Resources at the local Toyota dealership. You have recently determined that the monthly sales revenue per employee is $8800 (that is your dealership makes $8800 per employee each month). Currently the dealership has 50 employees with an average salary of $20/hour. This ends up being for each employee: ($20/hr)(40 hr/week)(4 weeks) = $3200 per month. You consider the wages (50 employees)($3200 per month) to be your monthly costs and suspect that it may be possible to hire a few more employees to maximize the dealership's monthly profits. A job-satisfaction survey has shown that for every $2 increase in hourly pay you are more likely to recruit and retain 4 employees. A. How many new employees should the dealership hire in order to maximize the monthly profit? B. Based on your work in Part A., you immediately hire more employees and increase the salary of those employees you have. In the first two months you discover an increase in monthly…
Data for Hermann Corporation are shown below: Fixed expenses are $77,000 per month and the company is selling 2,600 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200 and monthly sales increase by $15,300 ? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200 and monthly sales increase by $15,300 ? (Round any unit calculations up to the nearest whole unit.)
The selling price is $160 per unit. The contribution margin ratio is 70%. Fixed expenses are $249,984 per month. The company is currently selling 6,600 units. The marketing manager wants to increase sales revenue by $10 per unit and the advertising by $15,000. She thinks that this would cause a 5% decrease in monthly sales. If the changes below are made, what is the net income expected to become? HINT: This is not a change in income question. If you change selling price or variable cost, that change is for all units and you have to start over and include ALL the units now being sold. O $580,476 O $514,956 O $499,956 $702,240 O $452,256
Your firm sells widgets for $10 each. You make a gross profit of $3 on each widget. You have $300,000 of operating costs. Your company is exactly at break-even. What is the dollar amount of your cost of goods sold? Your firm has a gross profit of 15%. Your firm has operating costs of $75,000 per month. How much monthly revenue do you need to break-even?
You are the manager of an apartment complex with 100 units. When you set the rent at $1600 per month, all apartments are rented. As you increase rent by $50 per month, on average, 2 fewer apartments are rented. Maintenance costs run $200 per month for each occupied unit. What is the rent that maximizes the total amount of profit? Answer:
A restaurant has 145 seats needs $60,000 to earn the annual interest payment to the bank. Its monthly fixed labor cost is $7,800 along with other annual fixed cost of $270,000. It has a guest check average of $22 and per guest average cost of $15.50. What revenue is needed to cover all costs? What average daily seat turnover will be needed, assuming the operation is closed 3 days a year?
The LeeAnn Family Restaurant is open 24 hours a day and serves breakfast, lunch, and dinner. The owner of the business has determined that fixed costs are $24,000 per month. Variable costs are estimated at $9.60 per meal. The average total bill (excluding tax and tip) is $12 per customer. Assume that fixed costs increase to $30,000. How many additional meals must be served if the restaurant wishes to earn the same profit?
Your Corporation produces and sells a single product. The selling price is $140 per unit. The contribution margin is $98 per unit. Fixed expenses are $147,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $13 per unit. In exchange, the sales staff salaries would decrease by $22,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 600 units. What would the company's monthly net operating income be after this change?