Question 9.1 (Total: 20 marks) 1When Rosana, CFO of Hydie Inc., first evaluated the segmented income statement below, he flew his usual rage: "When are we having losses in our product lines, I would rather eliminate them." Product Lines Total 0 Sales Variable expenses Contribution margin Traceable fixed expenses * Common expenses, allocated Operating income (loss) $250,000 $100,000 $119,000 $37.500 $131,000 $63,000 $98.000 $31,000 $32.900 $18,000 $100 $14.000 $75,000 $35,000 $40,000 $37.000 $10,500 $(7,500) *These traceable expenses could be eliminated if the product lines to which discontinued. Required: Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer. Show all the necessary calculations. Question 9.2 (Total:20 marks) Vision Limited manufactures a product that has the following costs: Per unit Per year Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable SG&A expenses Fixed SG&A expenses $6.00 5.00 4.00 $360,000 5.00 120,000 The company applies the absorption costing approach to cost-plus pricing. The calculations are based on budgeted production and sales of 30,000 units per year. The company has spent $600,000 on this product and expects a return on investment of 15%. a) Calculate the markup on absorption cost. b) Compute the target selling price of the product using the absorption costing approach. Question 9.3 (Total:24 marks) Burnaby traders makes four products in a single facility. Following information regarding prod given: Product A B C $35.30 $30.20 $20.80 D $26.00 $8.50 $16.50 $15.80 $7.90 Selling Price per Unit Variable Manufacturing Cost per Unit Variable Selling Cost per Unit Milling Machine Minutes per Unit Monthly Deman in Units $3.80 $1.60 $1.90 $3.30 13.20 1180 2.20 2.50 4,000 1,000 3,000 1,000 WURM Required: 1) How many minutes of milling machine time would be required to satisfy demand for all four products? 2) Which product makes the LEAST profitable use of the milling machines? 3) Which product makes the MOST profitable use of the milling machines? Question 9.4 (Total: 26 marks) Cavendish Cheese Company makes three products within their single facility. Data concerning these products follow: Products B IC $57.70 $10.30 $8.00 $2.20 |$43.90 $8.60 $6.80 $ 1.80 A Selling price per unit $67.90 Direct materials $12.10 Direct labour $14.10 Variable manufacturing $2.60 overhead Variable selling cost per $2.50 Junit Mixing minutes per 2.70 lunit Monthly demand in 1,000 $2.20 $2.50 3.30 4.70 3.000 3.000 units The mixing machines are potentially a constraint in the production facility. A total of 25,800 minutes are available per month on these machines. Direct labour is a variable cost in this company. Submission Instructions: 1. How many minutes of mixing machine time would be required to satisfy the demand for all three products? 2. How much of each product should be produced, rounded to the nearest whole unit, to maximize operating income? 3. Up to how much should the company be willing to pay, rounded to the nearest whole cent, for one additional minute of mixing machine time if the company has made the best use of the existing mixing machine capacity? stion 9.5 (Total: 10 marks) Question 9.5 (Total: 10 m When analyzing the total variable overhead cost variance into both spending and efficie is often assumed that direct labour hours is the sole cost driver. Submission Instructions: 1. Explain if direct labour costs could ever be a better cost driver of variable overhead direct labour hours. 2. How would ABC system affect the overhead variances