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Can someone please help me with this? Thank you. Ch 9 1. A B total Sales volume (units) 200 100 300 Sales revenue $20,000 $40.000
Can someone please help me with this? Thank you.
Ch 9 1. A B total Sales volume (units) 200 100 300 Sales revenue $20,000 $40.000 $60,000 Variable costs: direct materials 7,000 10.000 17,000 direct labor 5,000 8.000 13,000 Contribution margin S8,000 $22,000 $30,000 Fixed costs: manufacturing OH 26.000 Profit $4.000 a) Compute allocated fixed costs and profit margins for products A and B. Use direct labor dollars as the cost driver. b) If we drop product A in the short term, how will this affect fixed costs? How will this affect profit? Should we drop product A in the short term? c) If we drop product A in the long term, how will this affect fixed costs? How will this affect profit? Should we drop product A in the long term? 2. General Mattress Company (GM) makes Standard and Deluxe mattresses. It has a three-step production process. In step 1, GM makes the coil spring frame for each mattress using machines. Deluxe has a more complex frame than Standard. In step 2, GM adds upholstery layers to the frame using manual workers. Deluxe has more complex upholstery than Standard. In step 3, GM conducts a quality control inspection for each mattress. The inspection is the same for Standard and Deluxe. General Mattress wants to implement a refined cost allocation with several cost pools. How many pools should it use? What is the most reasonable cost driver for each pool? (Choose among the following cost drivers: direct labor hours, machine hours, number of production setups, number of units, and number of new product designs)Step by Step Solution
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