Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help! need calculations with all answers Problem 16-36 CVP Analysis, Impact of Activity-Based Costing Salem Electronics currently produces two products: a pregrammable calculator and

please help! need calculations with all answers
image text in transcribed
image text in transcribed
Problem 16-36 CVP Analysis, Impact of Activity-Based Costing Salem Electronics currently produces two products: a pregrammable calculator and a tape recorder. A recent marketing study indicated that consumticis would react frot ably ro a zadies any commitment was made, however, Kenneth wanted i... 3nsw what the increstensalfirch costs would be and how many radios must be soid is cuper thiste snse: to help in projecting overhead costs for the new protuse. The wretherd conts based si 30,000 direct labor hours follow. (The high-low method using ditecc iabos hours as the independent variable was used to determine the fixed and variable costs.) The following activity data were also gathered: Betty was told that a plantwide overhead rate was used to assign overhead costs based on direa labor hours. She was also informed by engineering that if 20,000 radios were produced and sold (her projection based on her marketing study), they would have the same activity data as the recorders (use the same direct labor hours, machine hours, setups, and so on). Engineering also provided the following additional estimates for the proposed product line: Upon receiving these estimates, Betty did some quick safrulations and became quite excited With a selling price of $26 and just $18,000 of additionai fured costs, only 4,500 units had to be to strongly recommend the new product line. Required: 1. Reproduce Betty's break-even calculation using coriventional cost assignments. How much additional profit would be expected under this scenario, assuming that 20,000 radios are sold? 2. Use an activity-based costing approach, and calculate the break-even point and the incremental profit that would be earned on sales of 20,000 units. 3. Explain why the CVP analysis done in Requirement 2 is more accurate than the analysis done in Requirement 1. What recommendation would you make

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Self Study Problems/Solutions Book

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel

4th Edition

0471205133, 978-0471205135

More Books

Students also viewed these Accounting questions

Question

Explain all drawbacks of application procedure.

Answered: 1 week ago

Question

Design a health and safety policy.

Answered: 1 week ago