Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cardinal Company's cost system assigns MSDA expenses to customers using a rate of 37% of sales revenue. The new controller has discovered that Cardinal's
Cardinal Company's cost system assigns MSDA expenses to customers using a rate of 37% of sales revenue. The new controller has discovered that Cardinal's customers differ greatly in their ordering patterns and interaction with Cardinal's sales force. Because the controller believes Cardinal's cost system does not accurately assign MSDA expenses to customers, she developed an activity-based costing system to assign these expenses to customers. She then identified the following MSDA costs and additional information for two customers, Mandel and Bedell (Click the icon to view the activity-based costs.) (Click the loon to view the information.) Requirements (a) Using the current cost system's approach of assigning MSOA expenses to customers using a rate of 37% of sales revenue, determine the operating prof associated with Mandel and with Bedell (b) Using the activity-based costing information provided, determine the operating proft associated with Mandel and with Bedell (c) Which of the two methods produces more accurate assignments of MSDA expenses to customers? Explain. Requirement (a) Using the current cost system's approach of assigning MSDA expenses to customers using a rate of 37% of sales revenue, determine the operating proft associated with Mandel and with Bedell. (Round the profit percentages to two decimal places, XXX%) Sales Cost of goods sold Gross margin MSDA expenses Operating profit Profit percentage Mandel Bedell
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started