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Required information [ The following information applies to the questions displayed below. ] Ferry Electronics produces a wide variety of video and audio systems for
Required information
The following information applies to the questions displayed below.
Ferry Electronics produces a wide variety of video and audio systems for home entertainment. One of the Ferry plants
Lakeview produces home theatre systems. The plant produces three models, Silver, Gold, and Platinum, which differ in
the quality of the components and capability to "fill" the room with sound.
The financial team at Ferry is completing the planning for the coming quarter. Information on volumes and costs expected
for the quarter follow:
The team has been discussing two issues. First, there is disagreement about how best to allocate the manufacturing
overhead among the products. The current cost accounting system allocates manufacturing overhead to products based
on expected unit sales. Because Ferry carries no inventory, unit sales are equal to units produced. Second, there is a
concern about a "softening" in the demand for these systems and the managers at Ferry want to get a better
understanding of possible financial implications if demand should be weaker than expected. The finance team decides that a twostage system might improve the information available for management. They do an account
analysis and determine that there appear to be two main drivers of overhead: revenue and direct costs. Based on the account analysis,
the team splits the manufacturing overhead into two pools as follows:
d Compute total and perunit profits by product line based on the expected not breakeven sales by product line using the twostage
cost allocation system developed by the finance team.
Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round "Unit profit loss
answers to decimal places. Round your "Total profit loss answers to nearest whole dollar.
Answer is complete but not entirely correct. Required information
The following information applies to the questions displayed below
Ferry Electronics produces a wide variety of video and audio systems for home entertainment One of the Ferry plants
Lakeview produces home theatre systems. The plant produces three models, Silver, Gold, and Platinum, which differ in
the quality of the components and capability to "fill" the room with sound
The financial team at Ferry is completing the planning for the coming quarter Information on volumes and costs expected
for the quarter follow: The team has been discussing two issues First, there is disagreement about how best to allocate the manufacturing
overhead among the products The current cost accounting system allocates manufacturing overhead to products based
on expected unit salesBecause Ferry carries no inventory, unit sales are equal to units produced Second, there is a
concern about a "softening" in the demand for these systems and the managers at Ferry want to get a better
understanding of possible finan The finance team decides that a twostage system might improve the information available for management They do an account
analysis and determine that there appear to be two main drivers of overhead: revenue and direct costs Based on the account analysis,
the team splits the manufacturing overhead into two pools as follows:
Revenuerelated overhead
Direct cost related overhead
Total overhead
$
$
d Compute total and perunit profits by product line based on the expected not breakeven sales by product line using the twostage
cost allocation system developed by the finance team.
Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round "Unit profit loss
answers to decimal places. Round your "Total profit loss answers to nearest whole dollar.
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