Page 7 of 7 Problem 2) worth 30% Management ofToys R Us wishes to determine the
ID: 2597997 • Letter: P
Question
Page 7 of 7 Problem 2) worth 30% Management ofToys R Us wishes to determine the profitability of both of Toys R Usproducts. Management asks the organization's cost accountant to prepare an annual comparative analysis of sales, cost of sales and distribution costs for each product. The cost accountant gathered the following information to help prepare these analyses. Standard 500 Deluxe 350,000 Number of Units Sold Number of Orders Received 4,000 15,000 4.00 The cost accountant gathered the following expenses to help prepare these analyses. Selling Price per Unit Cost per Unit $20.00 12.00 $10.00 Cost $100,000.00 Allocation Standard 2:3 Deluxe 5% of Standard Sales 7% of Deluxe Sales Standard 1:1 Deluxe Advertising Commissions Manager's Salary 50,000.00 6.00 per order Other Costs (a) Compute the selling cost per unit. sale of each unit for the year (b) Prepare an analysis for Toys R Us that will show in comparative form the income derived from theExplanation / Answer
(a) Compute the selling cost per unit
Standard
Deluxe
Advertising (ratio 2:3)
40,000
60,000
Manager's salary (ratio 1:1)
25,000
25,000
Other costs ($6.00 per order)
90,000
24,000
Commission (5 and 7% of sales)
250,000
490,000
Total selling cost
405,000
599,000
Number of units sold
500,000
350,000
Selling cost per unit
0.81
1.71
(b) Prepare an analysis for Toys R Us that will show in comparative form the income derived from the sale of each unit for the year.
Standard
Deluxe
Selling price - per unit
$10.00
$20.00
Less: Cost per unit
$4.00
$12.00
Margin per unit
$6.00
$8.00
Less: Selling cost per unit
$0.81
$1.71
Net Income - per unit
$5.19
$6.29
Number of units sold
500,000
350,000
Total net Income
$2,595,000
$2,201,000
(a) Compute the selling cost per unit
Standard
Deluxe
Advertising (ratio 2:3)
40,000
60,000
Manager's salary (ratio 1:1)
25,000
25,000
Other costs ($6.00 per order)
90,000
24,000
Commission (5 and 7% of sales)
250,000
490,000
Total selling cost
405,000
599,000
Number of units sold
500,000
350,000
Selling cost per unit
0.81
1.71
(b) Prepare an analysis for Toys R Us that will show in comparative form the income derived from the sale of each unit for the year.
Standard
Deluxe
Selling price - per unit
$10.00
$20.00
Less: Cost per unit
$4.00
$12.00
Margin per unit
$6.00
$8.00
Less: Selling cost per unit
$0.81
$1.71
Net Income - per unit
$5.19
$6.29
Number of units sold
500,000
350,000
Total net Income
$2,595,000
$2,201,000
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