Income Statement of the Kicker Inc Questions

Description

The problem requires students to evaluate the profitability of an event.  The evaluation involves the classification of costs by function and as direct or indirect costs of the event.  Analysis should also include the classification of costs as relevant or not relevant to the decision.

  • 1.  How do you suppose Kicker accounts for the costs of the tent sales?  (Refer to cost terminology in chapter 2)
  • 2.  Using the data provided in the problem, calculate the profit or loss from the Austin tent sale?
  • 3.  Refer to the Chapter 8 material on relevant costs for Keep/Drop decisions.  Which of the amounts would be relevant to a decision to keep or drop the Austin tent sale?
  • 4.  What actions do you suggest Kicker take to improve the profitability of the Austin tent sale?

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