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Splish Design Inc., a high-fashion women's dress manufacturer, is planning to market a new cocktail dress for the coming season. Splish Design supplies retailers in
Splish Design Inc., a high-fashion women's dress manufacturer, is planning to market a 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 hand bag. However, if it uses the leftover material for the cape and hand bag, 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 would be 25% higher if a matching cape and hand bag were available. The market research indicates that the cape andlor 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 follows: Complete sets of dress, cape, and handbag 70% Dress and cape 6% Dress and handbag 14% Dress only,r 10% Total 100% The material used in the dress costs $13.00 a metre, or $5 1.00 for each d ress. The cost of cutting the dress if the cape and hand bag 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 manufactured in the quantities estimated. The selling prices and the costs to complete the three items once they are cut are asfol lows: Dress $202.00 $30.00 Cape 27.00 19.00 Handbag 1L00 6.00 (a) Your answer is partially correct. Calculate operating income if only the dress is cut and sold. Operating income 134400 Calculate operating income if the dress and accessories are produced and sold. (Round answer to O decimal places, e.g. 125.) Operating income 158340 eTextbook and Media Save for Later Attempts: 1 of 3 used Submit Answer Using multiple attempts will impact your score. 40% score reduction after attempt 2c)Calculate incremental profit. (Round answer to 0 decimal places, e.g. 125.) Incremental profit Senter the incremental profit in dollars rounded to 0 decimal places
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