Differential Analysis Report for Sales Promotion Proposal Rocket Shoe Company is

Question

Differential Analysis Report for Sales Promotion Proposal

Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $50,000 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.

No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 18,000 additional units of cross-trainer shoes or 15,000 additional units of running shoes could be sold without changing the unit selling price of either product.

Required:

1. Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes.

Differential Analysis Report

                                                                                                      

Differential cost of proposals:

Direct materials

Direct labor

Variable factory overhead

Variable selling expenses

Sales promotion expenses

Differential cost of proposals

Net differential income from proposed sales promotion campaign

                                           

                                                       

         

Cross-Trainer
Shoe Running
Shoe Unit selling price $41 $45 Unit production costs: Direct materials $ (8) $(10) Direct labor (3) (3) Variable factory overhead (2) (3) Fixed factory overhead (3) (4) Total unit production costs $(16) $(20) Unit variable selling expenses (13) (12) Unit fixed selling expenses (8) (4) Total unit costs $(37) $(36) Operating income per unit $ 4 $ 9

Explanation / Answer

Cross-Trainer Shoes Running Shoe Differential revenue from proposals 738000 675000 Differential cost of proposals: Direct materials -144000 -150000 Direct labor -54000 -45000 Variable factory overhead -36000 -45000 Variable selling expenses -234000 -180000 Sales promotion expenses -50000 -50000 Differential cost of proposals -518000 -470000 Net differential income from proposed sales promotion campaign 220000 205000

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.