Business, 21.04.2020 19:56 ambersaoulisoulfd1

The next two questions refer to the following fictional financial statement from Katie's Kicks: Revenue: $500,000 Shoes: $250,000 Shoe boxes: $1,000 Advertising: $500 Rent: $1,000 Depreciation: $25 How many additional shoes would Katie's Kicks have to sell to cover a $25,000 investment in advertising and maintain their current contribution to the company, assuming they are currently selling 5,000 pairs of shoes

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How many additional shoes would Katie's Kicks have to sell to cover a $25,000 investment in advertising and maintain their current contribution to the company, assuming they are currently selling 5,000 pairs of shoes will be: 502

First step is to calculate the contribution margin

Revenue $500,000

Less Variable expenses

Shoes $250000

Packaging $1000

Total Variable expenses $251,000

Contribution margin $249,000

($500,000-$251,000)

Second step is to calculate the contribution margin per shoe

Contribution margin per shoes=$249,000/5,000

Contribution margin per shoes=49.8

Now let determine how many additional shoes would Katie's Kicks have to sell

Additional shoes=$25,000/49.8

Additional shoes=502

Inconclusion how many additional shoes would Katie's Kicks have to sell to cover a $25,000 investment in advertising and maintain their current contribution to the company, assuming they are currently selling 5,000 pairs of shoes will be: 502

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Answer from: dayantapia2007

502

Explanation:

In this question, we are asked to calculate the number of additional shoes to be sold to cover a $25,000 investment in advertising whilst also maintaining current contribution to the company.

Firstly, we calculate the sum of variable expenses;

This is the sum of shoe boxes and shoes = 1,000 + 250,000 = 251,000

Now, we proceed to get the contribution margin.

Mathematically, contribution margin = Revenue - Total variable expenses = 500,000 - 249,000 = 251,000

The contribution margin per part can be calculated as ;

Contribution Margin/currently selling pairs of shoes= 249,000/5000 = 49.8

The additional parts to be sold = Investment in advertising/contribution margin per shoes

= 25,000/49.8

= 502

Answer from: Quest

Ithink the answers would be a and c and e!

Answer from: Quest

i would say iii (3) because in order to compare a price you have to use as a reference other near stores because it's its

hope i explained myself

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