1 TastyKreme and Krispy Kake are both producers of baked goods, but each has followed a different production strategy. Thedifferences in their strategies resulted in differences in their cost structure, as shown in the following table:TastyKreme21,00074$ 31,500Krispy Kake16,0009Estimated sales in unitsUnit priceVariable cost per unitTotal fixed costsRequired:4$ 48,0001. Compute the operating income and degree of operating leverage for each company. (Round "Degree of operating leverage" to 1decimal place.)2. Assuming sales volume for each company will decline by 10% and that their cost structures will not change, compute the percentageand dollar amount of the change in operating income for each company. (Negative values should be indicated by a minus sign.)1. Operating incomeDegree of operating leverage2. Percentage change in operating incomeDollar change in operating incomeTastyKremeKrispy Kake%%

Lets understand the basics.degree of operating leverage indicates percentage change in operating…

Answered: TastyKreme ated sales in units price…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 12PC

See similar textbooks

Similar questions

TastyKreme and Krispy Kake are both producers of baked goods, but each has followed a different production strategy. The differences in their strategies resulted in differences in their cost structure, as shown in the following table: TastyKreme 21,000 7 4 $ 31,500 Krispy Kake 16,000 9 Estimated sales in units Unit price Variable cost per unit Total fixed costs Required: 4 $ 48,000 1. Compute the operating income and degree of operating leverage for each company. (Round "Degree of operating leverage" to 1 decimal place.) 2. Assuming sales volume for each company will decline by 10% and that their cost structures will not change, compute the percentage and dollar amount of the change in operating income for each company. (Negative values should be indicated by a minus sign.) 1. Operating income Degree of operating leverage 2. Percentage change in operating income Dollar change in operating income TastyKreme Krispy Kake % %
The table below shows cost data for producing different amounts of cleaning products. Use the given information to answer the questions below. Quantity Total Cost Variable Cost Marginal Cost Average Variable Cost Average Total Cost in $ in $ in $ in $ in $ 344 0 354 10 384 40 444 100 534 190 644 300 0 5 10 15 20 25 A What is the profit (loss) at that level of production? 2 6 12 18 22 How many cleaning products would a competitive firm produce if the market price was $18? 2.00 4.00 6.67 9.50 12.00 70.80 38.40 29.60 26.70 25.76
mazin' 69 Corp. reports the following information for May: Information Amount Sales Revenue $720,300 Variable Cost of Goods Sold $148,600 Fixed Cost of Goods Sold $116,000 Variable Selling and Administrative Costs $105,300 Fixed Selling and Administrative Costs $71,900 1. Calculate the gross profit and operating income for May using absorption costing. 2. Calculate the contribution margin and operating income for May using variable costing.
The table represents the breakdown of cost structure, which is constructed based on the information of Zara case. What is the worst interpretation regarding the table below? Representative Competitor Zara Posted Selling Price 100.0 100.0 - Markdown -10.5 -2.6 Retail Selling Price (RSP) =89.5 =97.4 Manufacturing Cost -51.1 -44.8 Gross Margin =44.7 =46.3 - Advertising -3.1 -0.3 Advertising-adjusted Margins =41.6 =46.3 (a) Zara has the lower markdown and advertising cost than its competitors because of its entry-timing decision (i.e., entering the market later until the demand uncertainty is substantially resolved). (b) Zara has higher manufacturing cost than its competitors because of its speed decision (i.e., shorter cycle from design to retail). (c) Zara realizes its cost leadership because the cost decreases in markdown and advertising are greater than the cost increases in manufacturing cost. (d) Zara realizes its cost leadership because of its speed decision, not because of its…
Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.) Required: a. Assume that only one product is being sold in each of the following four case situations: Unit sold Sales Variable expenses Foxed expenses Operating income (loss) Contribution margin per unit $ Case #1 15,000 180,000 $ 100,000 120,000 50,000 $ $ Case #2 Case #1 Case #3 10,000 Case #2 70,000 $ 32,000 8,000 $ 12,000 $ 10 $ 13 Case #4 b. Assume that more than one product is being sold in each of the following four case situations: (Enter "Contribution margin ratio" in percent. Round your final answers to the nearest whole dollar amount.) Case #3 6,000 300,000 100,000 (10,000) Case #4
Jamison Company uses the total cost method of applying the cost-plus approach to product pricing. Jamison produces and sells Product X at a total cost of $1,200 per unit, of which $820 is product cost and $380 is selling and administrative expenses. In addition, the total cost of $1,200 is made up of $680 variable cost and $520 fixed cost. The desired profit is $180 per unit. Determine the markup percentage on total cost.fill in the blank 1 %
Crane Manufacturing Ltd. has provided you with the following CVP income statement. Sales (1,460 units) Variable costs: Cost of goods sold Selling expenses Administrative expenses Contribution margin Fixed costs: Cost of goods sold Selling expenses Administrative expenses Operating income $1,022,000 454,060 81,760 67,160 419, 20 153,300 52,560 33,580 $179,580 a. Calculate the contribution margin ratio. b. Calculate the break-even point in sales dollars and number of units.
Mallory Company uses the product cost method of applying the cost-plus approach to product pricing. It produces and sells Product X at a total cost of $35 per unit, of which $28 is product cost and $7 is selling and administrative expenses. In addition, the total cost of $35 is made up of $24 variable cost and $11 fixed cost. The desired profit is $8 per unit. Determine the markup percentage on product cost. Round your answer to one decimal place. %
The following data are for Elm Leaf Apparel: East Sales volume (units): Product XX Product YY Sales price: Product XX Product YY Variable cost per unit: Product XX Product YY 6,300 3,300 $12 $15 $7 $9 West 5,300 7,100 $13 $14 $7 $9 a. Determine the contribution margin for Product YY. $fill in the blank 1 b. Determine the contribution margin for the West Region. $fill in the blank 2
Complete the following income statements using absorption costing. Cost of goods sold: Production volume 300 320 workstations workstations Cost of goods sold per unit Number of workstations sold Total cost of goods sold Bison Business Solutions Absorption Costing Income Statements Production volume 300 320 Sales volume - 300 Workstations workstations workstations volume and sales volume affect the reported net income (loss)? E IUIUwing income statements using variable costing. Under absorption costing, can the difference between production Bison Business Solutions Variable Costing Income Statements Production volume (units) 300 320 workstations 300 workstations workstations 300 Sales volume (units) workstations 0 $ Net income (loss) Under variable costing, can a company increase aomo by increasing production?
Brissett Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below: GK LQ XK Selling price per unit $ 119.51 $ 226.07 $ 228.96 Variable cost per unit $ 89.87 $ 176.86 $ 178.92 Time on the constraint (minutes) 1.90 3.70 3.60 Required: A. Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized. B. Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource?
The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.31 and fixed costs of $72,120. Every dollar of sales contributes 31 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.69 and fixed costs of $552,920. Every dollar of sales contributes 69 cents toward fixed costs and profit. Both companies have sales of $1,202,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answers in the tabs below. Required A Required B > Answer is complete but not entirely correct. Compare the two companies' cost structures. Sales Variable cost Contribution margin Fixed costs Operating profit Dennis's Retail Mart's Amount $ 1,202,000✔…

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning