Problem 1: The Bear and Bull Company produces two products: bears and bulls. The following information is available:
Bears Bulls
Unit Selling Price $6 $9
Unit Variable Costs 2 3
Unit Contribution Margin 4 6
Sales Mix 65% 35%
Additional information: Total company-wide fixed costs are $156,200.
Given the stated sales mix, how many bulls will need to be sold in order to obtain a profit of $60,000?
Problem 2: Susie O disk jockey plays music at weddings, anniversaries, and birthdays. She would like to understand the cost structure of the company and has compiled the following records of activity and costs incurred. She believes that the number of functions catered is the best measure of activity.
Function
Cost
January
47
$474
February
44
$460
March
42
$450
April
40
$440
A. Using the high-low method, estimate the variable cost per function and the total fixed cost per month. (Round off the variable cost per function to the nearest cent and the total fixed cost to the nearest dollar.)
B. Using the least-squares regression method, estimate the variable cost per function and the total fixed cost per month. (Round off the variable cost per function to the nearest cent and the total fixed cost to the nearest dollar.)
Problem 3: The mission of Humpty Dumpty Preschool is to become the premier provider of childcare for children who are ages 2 through 5. At the time of the review process, management needs to be sure that the planned course of action will lead to the fulfillment of the organization's mission. Name and give an example of the next four steps that the preschool should take in articulating its strategic goals, beginning with defining a strategy.