Question :
183.Toppers produces two models of hats, fedoras and berets, both : 1302738
183.Toppers produces two models of hats, fedoras and berets, both made out of cool skin felt fabric. Information regarding the products is summarized for the month of May in the following table:
FedorasBerets
Number of hats produced 1,000 4,000
Sales revenue$28,000 $72,000
Variable costs12,00036,000
Fixed costs 3,200 7,000
Net Income$12,800$29,000
Yards of fabric per unit 0.80 yds.0.40 yds.
Profit per unit$12.80$7.25
Due to increased demand of hat felt in the market, Toppers can obtain only 3,800 yards of felt per month. Toppers can sell as many hats as it can produce, however, it must produce at least 800 of each to stay competitive. How many of each model of hat should Toppers make to maximize profit in June?
184.Kerwin Chocolates prepared the following concerning its two favors of chocolate covered popcorn sold in 2-pound bags:
Very GoodEven BetterTotals
Units 4,000 12,000 16,000
Revenue$100,000$180,000$280,000
Variable costs56,000105,000161,000
Fixed costs 20,000 40,000 60,000
Profit$ 24,000$ 35,000$ 59,000
Selling price per unit$25.00$15.00
Contribution margin per unit$11.00$6.25
Profit margin per unit$6.00$2.92
a.What is Kerwin’s weighted average contribution margin per unit?
b.Calculate Kerwin’s break-even point in units assuming the current mix.
c.What would be the number of Very Good and Even Better bags at the break-even level of sales?
d.What is Kerwin’s weighted average contribution margin ratio?
e.What level of sales (in dollars) would be needed to earn a profit of $64,950 assuming the current sales mix?
f.What would be the sales (in dollars) of Very Good and Even Better bags for Kerwin’s total sales calculated in Part e?
185.Listel Rx and Risen, Inc. are two companies in the pharmaceutical industry. Listel Rx does little research and development. Instead, the company pays for the right to produce and market drugs that have been developed by other companies. The amount paid is a percent of sales. Information for the current year follows:
Listel RxRisen, Inc.
Sales$180,000$116,000
Less variable costs 74,000 62,000
Contribution margin 106,00054,000
Less fixed costs 40,000 36,000
Profit $ 66,000$ 18,000
a.Calculate the expected percentage change in profit for a 25 percent decrease in sales for each company.
b.Which company has the higher operating leverage?
c.Which company is more risky? Justify your response.
186.Hayden Garden Tools produces two types of rakes with lifetime warranties. The industrial rake requires 2.4 labor hours and the residential rake requires 1.1 labor hours. The company has only 800 available labor hours per week. The company can sell all it can produce of either product.
IndustrialResidential
Selling price $360$210
Variable costs 220 150
Contribution margin $140$ 60
a.Which rake(s) should the company sell? Justify your answer.
b.What would be the incremental benefit of obtaining 200 additional labor hours?
187.Burger Time is interested in estimating fixed and variable costs on its triple treat burger. The following data are available:
DateTotal CostUnits
January$4,1401,030
February4,2201,020
March4,2001,040
April3,680900
May3,730890
June3,970980
July4,0901,000
August3,850940
The data generated the following regression analysis:
SUMMARY OUTPUT
Regression Statistics
Multiple R0.97955
R Square0.95953
Adjusted R Square0.95278
Standard Error45.9460
Observations8
ANOVA
dfSSMSFSignificance F
Regression1300333.75300333.8142.2682.1E-05
Residual612666.252111.042
Total7313000
CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0% Upper 95.0%
Intercept535.937289.6220321.8504720.11372-172.7421244.6-172.741244.62
X Variable 13.540.2965806311.927622.1E-052.811794.26322.811794.26321
a.Use the regression output to estimate fixed cost per month and variable costs per burger sold, and show the total cost equation.
b.Burger Time is considering an advertising campaign that is expected to increase monthly sales by 200 burgers. Assume that each burger sells for $9. What is the expected increase in profit associated with the advertising campaign?
188.Dyna Dog Diet’s regression for bags of organic dog food sold and the related costs appears below:
Regression Statistics
Multiple R0.981063
R Square0.962484
Adjusted R Square0.949978
Standard Error672.8269
Observations 5
ANOVA
df SS MS F Sign F
Regression1348419123484191276.965350.003119
Residual31358088452696.1
Total 4 36200000
LowerUpperLowerUpper
Coefficients Std Error t Stat P-value 95% 95% 95% 95%
Intercept2504.419305.6390.2691280.805279-27110.332119.11-27110.332119.11
Variable 1 1.98 0.226296 8.77299 0.003119 1.265119 2.70547 1.265119 2.70547
a.How much is the variable cost per unit?
b.How much is total fixed cost?
c.What is the amount of the slope?
d.At what point does the total cost line cross the y-axis if the data points used to construct the regression are graphed?
e.Write the total cost equation in good form.
f.If 2,500 bags of dog food are sold, how much is total cost?
