Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please response in 10 minutes. Do quickly (a) If a product is generating a loss, then it should be discontinued. Do you agree? Explain. (b)

image text in transcribed

please response in 10 minutes. Do quickly

(a) "If a product is generating a loss, then it should be discontinued." Do you agree? Explain. (b) Walton Company manufactures 30,000 units of Motor for use on its production line of producing Refrigerator. At this level of activity, the cost per unit for part Motor is: Direct materials $ 3.60 Direct labor. 10.00 Variable manufacturing overhead 2.40 Fixed manufacturing overhead, Traceable.... 5.00 Fixed manufacturing overhead, Common 4.00 Total cost per part $25.00 An outside supplier has offered to sell 30,000 units of Motor each year to Han Products for $21 per part. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, should the outside supplier's offer be accepted? Show all computations. (c) Persona Beauty Parlor is a company that provides services of beautification. It has two divisions: hair care, skin care. Following is an extract from the financial statements for the year ending 31 December 2014: Skin Care Hair Care Revenue $900 $600 million million In the board meeting Net $210 ($50) summoned for review of financial statements, income/loss) million million a director proposed that the company should dispose of the hair care division because it is losing money. The CEO argued that the board can't conclude that a segment is losing money just because it generated net loss for a period. She suggested that the company's chief financial officer should conduct a detailed analysis for presentation in the next board meeting. Being the company's management accountant, the CFO asked you to identify which of the following costs are relevant & irrelevant for the decision: 1. CEO's salary 2. Salaries of Hair Care workers who can be laid-off 3. Cost of materials needed by Hair care division 4. Annual directors' fee 5. Salary of the Hair Care chief operating officer 6. Company-wide quality certification fee 7. Head office rent

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

Step: 3

blur-text-image

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

Managerial Accounting

Authors: John Wild, Ken Shaw, Barbara Chiappetta

8th Edition

1264111924, 9781264111923

More Books

Students also viewed these Accounting questions

Question

Am I expecting too much from other people?

Answered: 1 week ago