Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ink Shots, Inc., is a new business located in upstate New York. It prints promotional flyers for local businesses and distributes them at public places

image text in transcribed
Ink Shots, Inc., is a new business located in upstate New York. It prints promotional flyers for local businesses and distributes them at public places or area events. The flyers are either placed on the windshield of cars in parking lots or distributed by hand to people. Ink Shots' owner, Dana Edwards, is facing a difficult decision. She could purchase a commercial printer and produce the flyers in house. However, the machinery, costing approximately $20,000 is quite expensive. The printer has an estimated useful life of four years and would be depreciated using the straight-line method with no salvage value. If Dana purchases the printer, she would also have to buy paper and toner for the machine and pay for maintenance or repairs as needed. She estimates that it would cost $0.02 per page to print the flyers herself. Alternatively, Dana could pay a local printing company $0.05 per copy to print the flyers She would incur no printing costs other than the 0.05 per page if she chooses this alternative. However, $0.05 per page is considerably more than Dana would have to pay for paper and toner if she owned a commercial printer. Dana plans to charge customers $0.08 per page for each flyer Ink Shots distributes. Quest on s to answer: Answer at least two. Why does Dana need to understand cost behavior? How does it impact Dana and her business? Name at least three costs in addition to the cost of producing the flyers that a business such as Ink Shots would incur, and describe the cost behavior of each one. Considering the decision Dana must make, determine the cost behavior of each alternative. Discuss other factors about Ink Shots' operating environment that Dana should consider when deciding whether to make the flyers or buy them from a local printing company. Discuss factors other than cost that Dana should consider

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

Auditing A Practical Approach

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton, Valerie Warren

3rd Canadian edition

1-119-40285-5, 111940276X, 978-1119566007

More Books

Students also viewed these Accounting questions

Question

=+What do you think about the CDFI Fund, establish in 1994?

Answered: 1 week ago