what would say for part 2 ?
Activity Based Costing 1263 PR 25-3A Differential analysis for sales promotion proposal OBJ. 1 Parisian Cosmetics Company is planning a one-month campaign for September to promote sales of one of its two cosmetics products. A total of $140,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: Moisturizer Perfume Unit selling price $55 560 Unit production costs Direct materials 59 $14 Direct labor 3 5 Variable factory overhead S Fixed factory overhead 6 Total unit production costs $21 528 Unit variable selling expenses 16 15 Unit fixed selling expenses 12 Total unit costs $49 549 Operating income per unit 5.6 $11 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 22,000 additional units of moisturizer or 20,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product Instructions 1. Prepare a differential analysis as of August 21 to determine whether to promote mois. turizer (Alternative 1) or perfume (Alternative 2). 2. The sales manager had tentatively decided to promote perfume, estimating that operating income would be increased by $80,000 ($11 operating income per unit for 20,000 units less promotion expenses of $140,000). The manager also believed that the selection of moisturizer would reduce operating income by $8,000 (86 operating income per unit for 22,000 units less promotion expenses of $140,000). State briefly your reasons for supporting or opposing the tentative decision. 5 Score: 100% 6 7 Key Code Keycode here 8 Instructions 9 Answers are entered in the cells with gray backgrounds, 10 Cells with non-gray backgrounds are protected and cannot be edited. 11 An asterisk (*) will appear to the right of an incomect entry. The essay answer will not be graded. 12 Enter a zero in cells you would otherwise teave blank. 13 14 1. Differential Analysis 15 Promote Moisturizer (Alt 1) or Promote Perfume (Alt 2) 16 August 21 17 Promote Promote 18 Differential Effect Moisturizer Perfume 19 on Income (Alternative 1) (Alternative 2) (Alternative 2) 21 Revenues $ 1,210,000 $ 1.200.000 (10,000) 22 Costs: 23 Direct materials (198,000) (280,000) (82,000) 24 Direct labor (66,000) (100,000) (34000) 25 Variable factory overhead (66,000) (100,000) (34,000) 26 Variable operating expenses (352,000) (300,000) 52,000 27 Sales promotion (140,000) (140,000) 28 Income (loss) $ 388,000 $ 280,000 $ (108,000) 29 30 Parisian should promote the moisturizer 31 32 ONDO NA NNNNNNNNN 20 33 2. 34 35 36 37 38 39 40 41 42 43 AA Pr. 25-3A + Ready
