Case 7-54 CVP Analysis with Production and Marketing Decisions; Taxes (Appendix) (LO 7-1, 7-4, 7-11) Oakley...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665582ed7bc53_109665582ed76847.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665582edb62cc_109665582edb24cf.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665582ee1db14_110665582ee19a90.jpg)
Transcribed Image Text:
Case 7-54 CVP Analysis with Production and Marketing Decisions; Taxes (Appendix) (LO 7-1, 7-4, 7-11) Oakley Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new units as well as replacement canopies. Oakley developed its 20x2 business plan based on the assumption that canopies would sell at a price of $530 each. The variable cost of each canopy is projected at $330, and the annual fixed costs are budgeted at $113,000 Oakley's after-tax profit objective is $279,000, and the company's tax rate is 25 percent. While Oakley's sales usually rise during the second quarter, the May financial statements reported that sales were not meeting expectations. For the first five months of the year, only 480 units had been sold at the established price, with variable costs as planned. It was clear the 20x2 after-tax profit projection would not be reached unless some actions were taken. Oakley's president. Melanie Grand, assigned a management committee to analyze the situation and develop several alternative courses of action. The following mutually exclusive alternatives were presented to the president. Reduce the sales price by $10. The sales organization forecasts that with the significantly reduced sales price, 4.000 units can be sold during the remainder of the year. Total fixed and variable unit costs will stay as budgeted .Lower variable costs per unit by $20 through the use of less expensive raw materials and slightly modified manufacturing techniques. The sales price also would be reduced by $25, and sales of 3,500 units for the remainder of the year are forecast Cut fixed costs by $11,300 and lower the sales price by 10 percent. Variable costs per unit will be unchanged. Sales of 3.300 units are expected for the remainder of the year. Required: Case 7-54 CVP Analysis with Production and Marketing Decisions; Taxes (Appendix) (LO 7-1, 7-4, 7-11) Oakley Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new units as well as replacement canopies. Oakley developed its 20x2 business plan based on the assumption that canopies would sell at a price of $530 each. The variable cost of each canopy is projected at $330, and the annual fixed costs are budgeted at $113,000 Oakley's after-tax profit objective is $279,000, and the company's tax rate is 25 percent. While Oakley's sales usually rise during the second quarter, the May financial statements reported that sales were not meeting expectations. For the first five months of the year, only 480 units had been sold at the established price, with variable costs as planned. It was clear the 20x2 after-tax profit projection would not be reached unless some actions were taken. Oakley's president. Melanie Grand, assigned a management committee to analyze the situation and develop several alternative courses of action. The following mutually exclusive alternatives were presented to the president. Reduce the sales price by $10. The sales organization forecasts that with the significantly reduced sales price, 4.000 units can be sold during the remainder of the year. Total fixed and variable unit costs will stay as budgeted .Lower variable costs per unit by $20 through the use of less expensive raw materials and slightly modified manufacturing techniques. The sales price also would be reduced by $25, and sales of 3,500 units for the remainder of the year are forecast Cut fixed costs by $11,300 and lower the sales price by 10 percent. Variable costs per unit will be unchanged. Sales of 3.300 units are expected for the remainder of the year. Required:
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
List the five Trust Services principles and explain whether a WebTrust licensed CPA can report on an entity's compliance with those principles individually or in combination.
-
What is the difference between a PLA and a PAL?
-
A generator of hazardous waste determines that more than 100 kg of waste will be generated in a calendar month. What documentation, identification, and so on, must they acquire?
-
A regional quality inspector for Green Roof Inns has sixteen properties she must visit next month. The driving time from one property to the next is proportional to the straight-line distance between...
-
We use the term Global Human Resource Management and International Human Resource Management interchangeably in this course. There are many similarities and differences between domestic HRM and...
-
Riverbed Distribution markets CDs of numerous performing artists. At the beginning of March, Riverbed had in beginning inventory 2 , 5 1 0 CDs with a unit cost of $ 7 . During March. Riverbed made...
-
Determine the equation of the line passing through the point below having the corresponding slope. Point: (80, 82) Slope: m = 9 8
-
A right-angle bracket AB pictured below is loaded and in static equilibrium. A B y Which statement best describes the internal shear diagram Vy(z) of this bracket?
-
Cape Machinery sells various types of machinery and equipment. You have been provided with the attached sales data records. You noted different date formats are used in the document. The records are...
-
Discuss contributions made by Ivy Ledbetter Lee to the field of public relations.
-
New Time Videos (NTV) is a new online video rental service. In the field, it is trying to compete by offering its customers access to all of the major new video releases in one business day. That is,...
-
The following data pertains to a company: Sales $600,000, Variable Costs $360,000, Fixed Costs $150,000. Calculate the break-even point in units and in sales dollars. Requirements: Calculate the...
-
In July 2003, Reynolds Company received a bill from the county government for property taxes on its land and buildings for the period July 1, 2002, through June 30, 2003. The amount of the tax bill...
-
The following pension information is for three different companies. For each company, compute the missing amount or amounts. ES ee SSS Company 1 Company 2 Company 3 PensionmUncdvasSetsmy.semteiaene...
-
Boatogooso Company began operating on January 1, 2003. At the end of the first year of operations, Boatogooso reported $500,000 income before income taxes on its income statement but taxable income...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App