Brian is the operating manager of Oriole, a company that manufactures three different types of all-terrain...
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Brian is the operating manager of Oriole, a company that manufactures three different types of all-terrain vehicles: four-wheelers, personal watercraft, and snowmobiles. Naturally, Brian has the opportunity to test all of these products for quality-control purposes. At the end of the year, Brian needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively. Sales Costs Four-Wheelers IT hours $1,117,000 Number of employees Maintenance hours Personal Watercraft Payroll $94,000 2 100 150 $1,402,000 Maintenance 3 200 Snowmobiles $114,000 $250,000 40 $1,984,000 IT 4 150 220 Four-Wheelers Watercraft $856,000 $1,138,000 20 1,800 800 18 750 1,250 Snowmobiles $1,764,000 27 1,300 900 Use Excel to allocate the three support department costs to the three product lines using the reciprocal method. (Round answers to 2 decimal places, e.g. 15.25.) (b) GA 4-Wheelers Operating income Operating Units Watercraft Profit margin Determine operating income amounts and profit margin percentages for each product line after accounting for the allocated support costs. (Round answers to 2 decimal places, e.g. 15.25 or 15.25%.) Snowmobiles Four-Wheelers Personal Watercraft Total % Snowmobiles % Brian is the operating manager of Oriole, a company that manufactures three different types of all-terrain vehicles: four-wheelers, personal watercraft, and snowmobiles. Naturally, Brian has the opportunity to test all of these products for quality-control purposes. At the end of the year, Brian needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively. Sales Costs Four-Wheelers IT hours $1,117,000 Number of employees Maintenance hours Personal Watercraft Payroll $94,000 2 100 150 $1,402,000 Maintenance 3 200 Snowmobiles $114,000 $250,000 40 $1,984,000 IT 4 150 220 Four-Wheelers Watercraft $856,000 $1,138,000 20 1,800 800 18 750 1,250 Snowmobiles $1,764,000 27 1,300 900 Use Excel to allocate the three support department costs to the three product lines using the reciprocal method. (Round answers to 2 decimal places, e.g. 15.25.) (b) GA 4-Wheelers Operating income Operating Units Watercraft Profit margin Determine operating income amounts and profit margin percentages for each product line after accounting for the allocated support costs. (Round answers to 2 decimal places, e.g. 15.25 or 15.25%.) Snowmobiles Four-Wheelers Personal Watercraft Total % Snowmobiles %
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To allocate the three support department costs Payroll Maintenance and IT to the three product lines FourWheelers Personal Watercraft and Snowmobiles ... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
Posted Date:
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