Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, could someone help me to answer this question? Thank you PT. Garmen Lestari produce and sell several type of clothing. Company's main products are

image text in transcribed
Hello, could someone help me to answer this question? Thank you
PT. Garmen Lestari produce and sell several type of clothing. Company's main products are shirts, pants, and ties. Budgeted income statement for each of the product and as a total for 30X0 are as follows : Shirts Ties Total Pants Sales Variable Costs Contribution Margin 245.000 150.000 50.000 445.000 Fixed Costs Operating Income 700.000 500.000 100.000 1.300.000 455.000 350.000 50.000855.000 140.000 225.00035.000 400.000 105.000 (75.000) 15.00045.000 From the budgeted income statement, it can be seen that pants is predicted to incurr loss, therefore the company is considering to drop pants product. If product pants is dropped, it will affect sales of shirts. It is predicted that sales of shirts will decrease by 10%. If product pants is dropped, not all of the fixed costs related to pants can be eliminated. Only 60% of the total fixed costs that can be reduced, while the remaining will still be incurred by the firm. Another option that the company can do is to place advertisement for pants. The costs of advertisement is expeceted to be 10.000. If the advertisement is placed, then sales of pants is predicted to increase by 10%. Based on the information given, suggest what alternatives that the company should choose. In this problem, ignore the qualitative factors

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

Managerial Accounting And Analysis In Multinational Enterprises

Authors: H P Holzer

1st Edition

3110100819, 978-3110100815

More Books

Students also viewed these Accounting questions