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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
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 $147,000 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 Shoes Shoes $57 $63 Unit selling price Unit production costs: Direct materials $(10) $(13) Direct labor (4) (4) Variable factory overhead (2) (4) Fixed factory overhead (6) (7) Total unit production costs $(22) $(28) Unit variable selling expenses (18) (17) Unit fixed selling expenses (10) (7) Total unit costs $(50) Operating income per unit $7 $(52) $11 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 30,000 additional units of tennis shoes or 25,000 additional units of walking shoes could be sold without changing the unit selling price of either product. Required:
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