Answered step by step
Verified Expert Solution
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
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
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