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Splish Design Inc., a high-fashion women's dress manufacturer, is planning to marketa new cocktail dress for the coming season. Splish Design supplies retailers in Toronto,
Splish Design Inc., a high-fashion women's dress manufacturer, is planning to marketa new cocktail dress for the coming season. Splish Design supplies retailers in Toronto, Montreal, and the Atlantic provinces. Four metres of material are laid out for the dress pattern. After cutting, some material remains,which can be sold as remnants. The company could also use the leftover material to manufacture a matching cape and handbag. However, if it uses the leftover material for the cape and handbag, more care will be needed in the cutting, and the cutting costs will therefore increase. The company expects to sell 2,400 dresses if a matching cape and handbag are not available. Splish Design's market research reveals, however, that dress sales wou Id be 25% higher ifa matching cape and hand bag were available. The market research indicates that the cape andior handbag could not be sold individually but only as accessories with the dress. The various combinations of dresses, capes, and hand bags that retailers will sell are as fol lows: Complete sets of dress, cape, and handbag 70% Dress and cape 6% Dress and handbag 14% Dress only 10% Total 100% The material used in the dress costs $13.00 a metre, or $51.00 for each dress. The cost of cutting the dress if the cape and handbag are not manufactured is estimated at $20.00 a d ress, and the resulting remnants can be sold for $5.00 for each dress cut out. lfthe cape and hand bag are to be manufactured, the cutting costs will be increased by $10.00 per dress. There will be no saleable remnants if the capes and handbags are manufactu red in the quantities estimated. The selling prices and the costs to complete the three items once they are cut are as follows: Dress $202.00 $30.00 Cape 27.00 19.00 Handbag 11.00 6.00 Excludes cost of material and cutting.(a) Calculate operating income if only the dress is cut and sold. Operating income Calculate operating income if the dress and accessories are produced and sold. (Round answer to O decimal places, e.g. 125.) Operating income e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer Using multiple attempts will impact your score. 40% score reduction after attempt 2C)Calculate incremental prot. {Round answer to 0 decimal places, 6.9. 125.) Incremental profit I Senter the incremental profit in dollars rounded to 0 decimal places
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