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Differential Analysis for Sales Promotion Proposal Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe
Differential Analysis for Sales Promotion Proposal Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $100,000 has been budgeted for advertising contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: Tennis Walking Shoe Shoe Unit selling price $85 $100 Unit production costs Direct materials Direct labor Variable factory overhead Fixed factory overhead Total unit production costs $19 $32 12 16 $60 10 15 $85 $15 $50 Unit variable selling expenses Unit fixed selling expenses 20 $76 $9 Total unit costs Operating income per unit No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 7,000 additional units of tennis shoes or 7,000 additional units of walking shoes could be sold without changing the unit selling price of either product. Required: 1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). If an amount is zero enter zero "O. Use a minus sign to indicate subtracted amounts, negative amounts, or a loss. Differential Analysis Promote Tennis Shoe (Alt. 1) or Promote Walking Shoe (Alt. 2) June 19 Promote Tennis Shoe (Alternative 1) Promote Walking Shoe (Alternative 2) Differential Effect on Income (Alternative 2) Costs Direct materials Direct labor Variable factory overhead Variable selling expenses Sales promotion Income (Loss)
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