Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CVP Income Statement / Product Line Analysis The owners of Flaming BBQ Co. are currently reviewing a proposal to adopt a new product line-Portable BBQ

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
CVP Income Statement / Product Line Analysis The owners of Flaming BBQ Co. are currently reviewing a proposal to adopt a new product line-Portable BBQ This new product line will be compatible with their existing product line, BBQ's and open a new target market. Time left 1:34:43 customers. It is anticipated that the Portable BBQ line is introduced next spring. Management has estimated the following for the Portable BBQ product line: Expected Sales 700 Portable BBQ's Selling Price $ 525 per Portable BBQ Expenses: Advertising $ 12,000 annually Assembly $ 110 per BBQ Cost of Goods Sold $ 220 per BBQ Rent 5% of sales Salaries $ 4,000 per month Sales Commisions 10% of sales The company will need to hire one sales clerk for the Portable BBQ line. This sales clerk will only work for 5 months of the year (May to September), Required: PART A: Prepare a budgeted CVP Income statement (for a one-year period) to determine the segment margin for the new Portable BBQ product line. (15 marks) (DO NOT ENTER ANY Dollar signs "5" or commas","PLEASE ENTER NUMBERS AS 123456 and where 2 decimals Indicated enter number like 123456.78) Per BBQ Percentage Portable BBQ Product Line Budgeted CVP Income Statement For the year ended December 31, 2021 TOTAL Number of BBQ's 700 Sales Revenue: Less: Variable Costs: (Must be in alphabetical order) Choose 100% Choose Required: PART A: Prepare a budgeted CVP Income statement (for a one year period) to determine the segment margin for the new Portable BBQ product line. (15 marks) Time left 1:34 (DO NOT ENTER ANY Dollar signs "s" or commas","PLEASE ENTER NUMBERS AS 123456 and where 2 decimals Indicated enter number like 123456.78) Portable BBQ Product Line Budgeted CVP Income Statement For the year ended December 31, 2021 Per BBQ TOTAL 700 Percentage % 100% Number of BBQ's Sales Revenue: Less: Variable Costs: (Must be in alphabetical order) Choose... Choose . Choose.. Choose Total Variable Costs: Choose... Less: Fixed Costs (Must be in alphabetical order) Choose... Choose. Total Fixed Costs: Portable BBQ Segment Net Income: $ UL 23 Time left 1: Required: PART B: Assume the company has a margin of safety percentage of 50%. What does 50% mean? Would this be considerea nsky To the company? ut of A BI ! 24 Required. In what arcumstances would management like to have a high operating severage A- B on 25 ared d out of Required: PART C: Assume management has decided to go ahead with offering the Portable BBQ product line. Time left 1 345 The owners of Flaming BBQ Co. are concerned about the ability of the Portable BBQ line to cover its fixed cost a good return on investment (ROI). An investment is required for the necessary fixtures, display racks, and inventory. The owners have provided the minimum rate of return on investment below. Use the cost information and unit sales provided in Part A above to answer the question below. Required investment in assets is $200,000 Minimum return on investment is 15% Calculate the following: (to 2 decimals) g on Unit Variable cost: Fixed cost per Portable BBQ: Desired return on investment per BBQ (In dollars): Markup percentage using variable costing: Selling price using variable costing (DO NOT ENTER ANY Dollar signs "S" or commas", * PLEASE ENTER NUMBERS AS 123456 and where 2 decimals Indicated enter number like 123456.78) hn 26 is the selling price noted in PARTA sufficient to earn the minimum required return expected by the owners? (Yes or No) + wed Select one it out of a. Yes b. No 2 to 27 Why or why not? Time left 1:34:09 yer wered 7 A B I EE ked out ag sation I stion 28 yo word Required: PART D: Suppose management has determined that the maximum selling price that the market is willing to pay is $400, Assume management wants to earn a 15% return on investment ke Maximum Soling Price $400 Target Cost per Portable BBQ (1 mark) - 5 (calculate to 2 decimals do not use commas) stion 29 Required: What advice would you give to management to help them achieve the target cost you calculated above? (2 marks) yer word Sed out of GWA

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Theodore Christensen, David Cottrell, Cassy Budd

12th Edition

1260165116, 9781260165111

More Books

Students also viewed these Accounting questions

Question

Compare and contrast private equity versus public equity.

Answered: 1 week ago