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Smith Company sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the following data:
Smith Company sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the following data: E (Click the icon to view the data.) Prepare an analysis to show which product the company should emphasize. (Enter the units displayed per square foot and the contribution margin per square foot to two decimal places.) Product Data Table Designer Moderately Priced Per Item Units displayed per square foot: Designer Moderately priced Moderately Priced Designer Contribution margin per unit Contribution margin per square foot of display space Average sale price $ 81 210 $ 85 21 Capacity-Square feet of display space Average variable costs Average contribution margin Average fixed costs (allocated) 125 60 Total contribution margin at capacity 25 5 $ 100 $ 55 Average operating income The Smith Company store in Grand Junction, Colorado, has 12,000 square feet of floor space. If Smith Company emphasizes moderately priced goods, it can display 840 items in the store. If Smith Company emphasizes designer wear, it can only display 360 designer items. These numbers are also the average monthly sales in units. Print Done
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