Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer this question for me. I need all parts to the best of your ability, including PART A,B,C,D. Please answer all parts or else

Please answer this question for me. I need all parts to the best of your ability, including PART A,B,C,D. Please answer all parts or else your answer is useless. image text in transcribed

Total Department AMFM radios HD radios Sales Less variable $320,0001 100% | | S270.000| 100%| $50,000 100 236,000 | 84,000 | 15,000 | 69,000 40,000 | $29,000! Contribution Ma Less Traceable Fixed E 7490| 26% 5% | 216,000 | 54,000 | 10,000 | 80% | 20% | 4% | 20,000 30,000 5,000 | 40% 60% 10% | ent Margin 500 Less Common Fixed Expenses Net Operating Income 13% 9% During your first day on the job, you attend a meeting regarding product lines carried by the chain. You learn about a fairly new innovation called HD (high definition) radio. This product allows consumers to listen to not only traditional AM and FM bands, but also to the newly created HD frequencies that most local radio stations are broadcasting free of charge to listeners on adjacent frequencies that previously were unused. Unlike satellite radio, this service requires no subscription charges. Consumers who have hcard HD radio tell you that AM-HD broadcasts sound like FM and FM-HD broadcasts sound like CD quality! Due to improved manufacturing technologies, the cost to manufacture HD radios has dropped dramatically, PROBLEM: Your boss (the District Manager) has authorized you to spend $10,000 for advertising for one of your chain's local stores, promoting one of their product lines. A Marketing Research class at Bridgewater State University conducted a study indicating that the additional advertising would increase sales of the AMFM radios by S50,000 and increase sales of the HD radios by only $45,000. The local store manager (who never took a course in Managerial Accounting) argues that the advertising budget should be spent on the AMFM radios because it will result in more sales dollars. The store are substantially higher than the HD line, therefore as the biggest selling item, it should receive all advertising allotments. manager also argues that the AMFMradio line's total sales REQUIRED: YOU ARE TO WORK INDEPENDENTLY ADetsmine which product line (AMFM radios or HD radios) you will spend the $10,000 of advertising on. Show your work, justifying this decision, based upon a costbenefit analysis. What would you tell the store manager? Include a short memo to your boss (the District Manage) explaining your decision. B.Using Excel, prepare new segmented income statements (including the new sales and cost data) based upon your recommendation. (hint: on what line would the S10,000 of dedicated advertising appear?) You should submit 3 segmented income statements. The first being the original data on front of this page, the second, assuming the advertising is spent on AMFM and the third assuming the advertising is spent on HD radios Q.What form of media would you recommend using to advertise your chosen product line? (explain why) DArc there any "implici" considerations that should enter the decision on which product line to promote

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions