Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Forrer Company has two products: A, B and C The annual production and sales level of Product A is 18,188 units. The annual production and
Forrer Company has two products: A, B and C The annual production and sales level of Product A is 18,188 units. The annual production and sales level of Product B is 31,652 units and Product C is 20,500 units. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity in units for each of its three activity cost pools. Activity Estimated Expected Activity Cost Pool m Product Product Product A B 9 Activity 1 $ 90,000 200 800 500 Activity 2 490,000 600 5,400 1,000 Activity 3 67,000 1,000 500 7'00 REQUIRED: i. Based on Activities based costing method; Compute the total overhead cost allocated to Product B (rounded to dollars and cents)? (7 Marks) ii. What is the overhead cost per unit of Product C under activity-based costing (rounded to dollars and cents)? (8 Marks) B. Sublex Company reported the the following information about the company performance for the year 2021; Sales $ 500,000; Average operating assets $ 200,000: Net operating income $30,000 and Operating expenses $ 470,000. In the beginning of 2022, the company intends to consider the following investment. Machine Investment $ 100,000 Sales increases 35,000 Expenses increases 20,000 Net Operating income 40,000 Average operating assets 300,000 Sales 535,000 Operating Expenses 495,000 REQUIRED a) Calculate the Sublex company's ROI for the year 2021. (4 Marks) b) Calculate the New ROI in 2022 if the company accept the investment. (4 Marks) c) If the company determined the required rate of return by 14% on the additional investment; Will the company accept the additional investment in 2022? Why? {2 Marks)
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