Chapter 7 P1: Go Camera manufactures and sells two types of cameras for cars and drones. These two models are manufactured in separate facilities and each facility is treated as profit center. Go Camera serves as a supplier to car manufacturers as well as drone manufacturers. The following table provides cost and price information for each model: Car Camera Drone Camera Selling Price $70 $100 Variable Cost $30 $35 Fixed Cost $300,000 $ 600,000 Go Camera has a marketing department with cost $400,000 which needs to be allocated to the two profit centers, Car Camera and Drone Camera. The cost allocation can be done by two ways, 30:70 (Car gets 30% and Drone gets 70%) or based on profits. The projected sales in units are 10,000 for car and 15,000 for Drones respectively. (a) Determine the segmented expected profits for Car camera as well as for Drone camera after allocating the marketing department cost using a 30:70 allocation rule. (b) Determine the segmented expected profits for Car camera as well as for Drone 335 Cost Allocation: Theory Units Price per unit Variable cost per unit Own fixed costs per month Lig Vita 200,000 $10 S6 $90,000 Dry 75,000 $21 $11 $110,000 Again, the "Own fixed costs" consist of all fixed costs that can be traced directly to one of the two products (Liq Vita and Dry), and these costs do not vary with the number of units produced. Required: a. Prepare a typical monthly income statement for LiqVita and Dry after allocating the common fixed overhead costs of S1,500,000 per month to the two product lines based on the relative proportions of total variable costs generated by each product. b. Which of the two products in part (a) is the most profitable and which is the least profitable? Note: you are not being asked to analyze or explain the relative profitablities of LiqVita and Dry c. Vorma is planning to introduce a tablet version of its vitamin into China, with a selling price of S9 and a variable cost per unit of S7. At a price of S9, Vorma managers believe they will sell 950,000 units per month in China. Introducing the new product (called China) will require additional "Own fixed costs" (just for China) of $800,000. As in part (a), prepare monthly income statements, computing the monthly net income for the three products (LiqVita, Dry, and China). Allocate the common fixed overhead of $1,500,000 based on the relative proportions of total variable costs generated by each product. d. As in part (b), list the order of the most profitable to least profitable products. Do not do any analysis e Compare the relative profitability of the two products (LiqVita and Dry) before introducing China (part b) and after introducing China (part d). Analyze and discuss why G