Question Help Thurman Company manufactures a DVD player called Orlicon. (Click the icon to view additional information.) As a result of the actions taken, quality has significantly improved in 2017 while rework and unit costs of the Orlicon have decreased. Thurman has reduced manufacturing capacity because capacity is no longer needed to support rework. Thurman has also lowered the Orlicon's selling price to gain market share and unit sales have increased. Information about the current period (2017) and last period (2016) follows. (Click the icon to view the information.) i (Click the icon to view additional information.) Read the requirements. 2016 990000 2017 9 96000 i Data Table Revenues Costs Direct material costs Manufacturing conversion costs Selling and customer service costs Total costs 13000|| 528000 7000 374000 | Operating income (loss) 27 Requirement 2. Calculate the growth, price-recovery, and productivity components that explain the change in opera 2016 2017 1. Units of Oricon produced and sold 10,000 12,000 2. Selling price 99 $ 3. Direct materials used (kits) 13,000 7,000 4. Direct material cost per kit 27 $ 5. Manufacturing capacity in kits processed 24,000 17,000 6. Total conversion costs $ 528,000 $ 374,000 7. Conversion cost per unit of capacity (row 6 / row 5) $ 22 $ 22 8. Selling and customer-service capacity 95 customers 95 customers 9. Total selling and customer-service costs $ 19,000 $ 20,900 Selling and customer-service capacity per customer (row 10. 9/row 8) $ 200 $ 220 * A kit is composed of all the major components needed to produce a DVD player. To assist you, use the popup to identify the various components of the formulas. (Click to view the components you will use in your formulas.) Begin by determining the formula to calculate the revenue effect of growth. Then enter the amounts in the formula. = Revenue effect of growth Choose from any list or enter any number in the input fields and then continue to the next question. Save for Later Print Done Begin by determining the formula to calculate the revenue effect of growth. Then enter the amounts in the formula. jx = Revenue effect of growth 1 = Next, determine the formula to calculate the cost effect of growth for direct material costs. Then enter the amounts in the formula. Think carefully, based upon the information given to you, about which cost is direct material. = cost effect of growth for direct material costs J x x - Determine the formula to calculate the cost effect of growth for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service costs. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Complete all input cells.) ) x = 1 )x Cost effect of growth for fixed costs conversion costs selling and customer service costs Calculate the net change in operating income due to the growth component. Be sure to label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. Revenue effect of growth Cost effect of growth Change in operating income due to growth Calculate the price recovery component of the change in operating income. Begin with the revenue effect of price recovery. Select the formula you will need and then enter the amounts to calculate the revenue effect of price recovery. (Click to view the components you will use in your formulas.) ( - ) = Revenue effect of price-recovery )x L )x Next determine the formula to calculate the cost effect of price recovery for direct material costs. Then enter the amounts in the formula. Think carefully, based upon the information given to you, about which cost is direct materials. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Complete all input cells.) 7 x = Cost effect of price-recovery for direct material costs 7 x Determine the formula to calculate the cost effect of growth for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service - - - - - - - - - - - 11 - A l -I- - -- -- - - - - - - - - - - IOU - - - - -- - - - - - 11 - - -- - - - - 1 - - - - - Determine the formula to calculate the cost effect of growth for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service costs. (For amounts with a $0 balance, make sure to enter "O" in the appropriate cell. Complete all input cells.) ))x = cost effect of price-recovery for fixed costs )x conversion costs 2x selling and customer-service costs Calculate the net change in operating income due to the price recovery component. Be sure to label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. Revenue effect of price recovery Cost effect of price recovery Change in operating income due to price recovery Calculate the productivity component of the change in operating income. Begin with the cost effect of productivity for direct material costs. Select the formula you will need and then enter the amounts to calculate the revenue effect of price recovery. 3 (Click to view the components you will use in your formulas.) = cost effect of productivity for direct material costs Determine the formula to calculate the cost effect of productivity for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service costs. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Complete all inp Cost effect of productivity for fixed costs 1)x J x conversion costs selling and customer-service costs Calculate the net change in operating income due to the productivity component. Be sure to label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. If an amount is zero, leave the label blank.) Direct material costs Conversion costs Selling and customer-service costs Change in operating income due to productivity Requirement 3. Comment on your answer in requirement 2. What do these components indicate? in operating income resulted from Thurman's strategy. The company was able to continue to The analysis of operating income indicates that a significant amount of the V while growing sales. Thurman Company Choose from any list or enter any number in the input fields and then continue to the next question. Question Help Thurman Company manufactures a DVD player called Orlicon. (Click the icon to view additional information.) As a result of the actions taken, quality has significantly improved in 2017 while rework and unit costs of the Orlicon have decreased. Thurman has reduced manufacturing capacity because capacity is no longer needed to support rework. Thurman has also lowered the Orlicon's selling price to gain market share and unit sales have increased. Information about the current period (2017) and last period (2016) follows. (Click the icon to view the information.) i (Click the icon to view additional information.) Read the requirements. 2016 990000 2017 9 96000 i Data Table Revenues Costs Direct material costs Manufacturing conversion costs Selling and customer service costs Total costs 13000|| 528000 7000 374000 | Operating income (loss) 27 Requirement 2. Calculate the growth, price-recovery, and productivity components that explain the change in opera 2016 2017 1. Units of Oricon produced and sold 10,000 12,000 2. Selling price 99 $ 3. Direct materials used (kits) 13,000 7,000 4. Direct material cost per kit 27 $ 5. Manufacturing capacity in kits processed 24,000 17,000 6. Total conversion costs $ 528,000 $ 374,000 7. Conversion cost per unit of capacity (row 6 / row 5) $ 22 $ 22 8. Selling and customer-service capacity 95 customers 95 customers 9. Total selling and customer-service costs $ 19,000 $ 20,900 Selling and customer-service capacity per customer (row 10. 9/row 8) $ 200 $ 220 * A kit is composed of all the major components needed to produce a DVD player. To assist you, use the popup to identify the various components of the formulas. (Click to view the components you will use in your formulas.) Begin by determining the formula to calculate the revenue effect of growth. Then enter the amounts in the formula. = Revenue effect of growth Choose from any list or enter any number in the input fields and then continue to the next question. Save for Later Print Done Begin by determining the formula to calculate the revenue effect of growth. Then enter the amounts in the formula. jx = Revenue effect of growth 1 = Next, determine the formula to calculate the cost effect of growth for direct material costs. Then enter the amounts in the formula. Think carefully, based upon the information given to you, about which cost is direct material. = cost effect of growth for direct material costs J x x - Determine the formula to calculate the cost effect of growth for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service costs. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Complete all input cells.) ) x = 1 )x Cost effect of growth for fixed costs conversion costs selling and customer service costs Calculate the net change in operating income due to the growth component. Be sure to label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. Revenue effect of growth Cost effect of growth Change in operating income due to growth Calculate the price recovery component of the change in operating income. Begin with the revenue effect of price recovery. Select the formula you will need and then enter the amounts to calculate the revenue effect of price recovery. (Click to view the components you will use in your formulas.) ( - ) = Revenue effect of price-recovery )x L )x Next determine the formula to calculate the cost effect of price recovery for direct material costs. Then enter the amounts in the formula. Think carefully, based upon the information given to you, about which cost is direct materials. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Complete all input cells.) 7 x = Cost effect of price-recovery for direct material costs 7 x Determine the formula to calculate the cost effect of growth for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service - - - - - - - - - - - 11 - A l -I- - -- -- - - - - - - - - - - IOU - - - - -- - - - - - 11 - - -- - - - - 1 - - - - - Determine the formula to calculate the cost effect of growth for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service costs. (For amounts with a $0 balance, make sure to enter "O" in the appropriate cell. Complete all input cells.) ))x = cost effect of price-recovery for fixed costs )x conversion costs 2x selling and customer-service costs Calculate the net change in operating income due to the price recovery component. Be sure to label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. Revenue effect of price recovery Cost effect of price recovery Change in operating income due to price recovery Calculate the productivity component of the change in operating income. Begin with the cost effect of productivity for direct material costs. Select the formula you will need and then enter the amounts to calculate the revenue effect of price recovery. 3 (Click to view the components you will use in your formulas.) = cost effect of productivity for direct material costs Determine the formula to calculate the cost effect of productivity for fixed costs. Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs first, then for selling and customer service costs. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Complete all inp Cost effect of productivity for fixed costs 1)x J x conversion costs selling and customer-service costs Calculate the net change in operating income due to the productivity component. Be sure to label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. If an amount is zero, leave the label blank.) Direct material costs Conversion costs Selling and customer-service costs Change in operating income due to productivity Requirement 3. Comment on your answer in requirement 2. What do these components indicate? in operating income resulted from Thurman's strategy. The company was able to continue to The analysis of operating income indicates that a significant amount of the V while growing sales. Thurman Company Choose from any list or enter any number in the input fields and then continue to the next
