Data related to the expected sales of snowboards and skis for Winter Sports Inc. for the current year

PR 21-5A Data related to the expected sales of snowboards and skis for Winter Sports Inc. for the current year, which is typical of recent years, are as follows:

Snowboards $250.00 $170.00 40%
Skis 340.00 160.00 60%

The estimated fixed costs for the current year are $420,000.

INSTRUCTIONS:
1. Determine the estimated units of sales of the overall product necessary to reach the break even point for the current year.
2. Based on the break even sales (units) in part (1), determine the unit sales of both snowboards and skis for the current year.
3. Assume that the sales mix was 60% snowboards and 40% skis. Compare the break even point with that in part (1). Why is it so different?


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Billy has created a device called a TowRack which is a rack for carrying sports equipment such as bikes, skis, and kayaks

Billy has created a device called a TowRack which is a rack for carrying sports equipment such as bikes, skis, and kayaks. What makes this item different from other racks is that it attaches to a vehicle's trailer hitch and has a single wheel to help support the weight of the rack and items attached to it. Because it is so much lighter than a regular trailer, it can be used on even the smallest of cars that are not designed to tow regular trailers. Because of the success of this product, competitors introduce similar products. But because of the initial success of Billy's TowRack, all of these similar products are often referred to as TowRacks. Billy has also written a book about using "TowRacks" and safe driving techniques for driving with TowRacks and would like to obtain a copyright for the book. Discuss Billy's legal situation, including patent, trademark and copyright issues.

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Ashley runs a small business in Boulder, Colorado, that makes snow skis

Ashley runs a small business in Boulder, Colorado, that makes snow skis. She expects the business to grow substantially over the next three years. Because she is concerned about their product liability and is planning to take the company public in 2014, she is currently considering incorporating the business. Financial data are as follows.

2013 2014 2015
Sales Revenue 150,000 320,000 600,000
Tax-Free Interest Income 5000 8000 15,000
Deductible cash expenses 30,000 58,000 95,000
Tax depreciation 25,000 20,000 40,000

a) Compute the present value of the future cash flows for 2013-2015 assuming that Ashley incorporates the business and pays all after-tax income as dividends (for Ashleys dividends that qualify for the 15% rate)

b) Compute the present value of the future cash flows for 2013 to 2015 assuming that Ashley continues to operate the business as a sole proprietorship

c) Should Ashley incorporate the business this year?

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