Question
Cole sells both designer and moderately priced fashion accessories. Top Management is deciding which product line to emphasize. Accountants have provided the following data: Per
Cole sells both designer and moderately priced fashion accessories. Top Management is deciding which product line to emphasize. Accountants have provided the following data:
| Per Item | ||
| Designer | Moderately Priced | |
| Average Sales Price | $195 | $79 |
| Average variable costs | $85 | $21 |
| Average Contribution Margin | $110 | $58 |
| Average Fixed Costs (Allocated) | $20 | $5 |
| Average operating income | $90 | $53 |
The Cole Store in Grand Junction, Colorado, has 13,000 Square Feet of floor space. If Cole emphasizes moderately priced goods, it can display 780 items in the store. If Cole emphasizes designer wear, it can display only 520 designer items. These numbers are also the average monthly sales in units. Prepare an analysis to show which product the company should emphasize.
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Financial Accounting Plus
Authors: Robert Libby, Patricia Libby, Daniel Short
8th Edition
1259116832, 9781259116834
