Question
Crane Inc. is the only player in the classy snow shovel market. The variety of shovel designs includes camouflage (both green and pink, of course),
Crane Inc. is the only player in the classy snow shovel market. The variety of shovel designs includes camouflage (both green and pink, of course), snowman, beach, and northern lights. Crane purchases basic aluminum snow shovels from a supplier, applies its durable designs, and sells the shovels for $30 each. Last year, the company generated $55,000 in operating income, based on the following details. Sales volume in units 10,100 Operating expenses $87,000 DM cost per unit $5.00 DL cost per unit $2.00 Variable-MOH per unit $4.00 Fixed-MOH per unit $2.00 This year, the company realizes that its operating expenses will increase by $14,000 and its direct labor costs will increase by 20% per unit. (a) What markup percentage on total cost did the company use last year when it generated $55,000 in operating income? (Round answer to 2 decimal places, e.g. 15.25%.) Markup percentage enter the markup percentage rounded to 2 decimal places % (b) What markup percentage on total cost will the company need to use this year to generate $121,000 in operating income while increasing sales volume by 30%? If the companys asset base is $1,775,000, what is the ROI earned under this scenario? (Round answers to 2 decimal places, e.g. 15.25%.) Markup percentage enter percentages % ROI enter percentages rounded to 2 decimal places % (c1) How much operating income will the company generate this year if it uses a 50% markup on total cost, while still expecting a 30% increase in volume? If the companys asset base is $1,775,000, what is the ROI earned under this scenario? (Round ROI to 2 decimal places, e.g. 15.25%.) Operating income $enter a dollar amount ROI enter percentages rounded to 2 decimal places %
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