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Requirement 1 Data: Requirement 2 Data: Income Statement for #3 Blank options for #1: Deluxe or Standard. Blank option for #2: Contribution margin per machine
Requirement 1 Data:
Requirement 2 Data:
Income Statement for #3
Blank options for #1: Deluxe or Standard.
Blank option for #2: Contribution margin per machine hour, sales price per pair, or variable cost per pair.
Requirements 1. Akil produces Standard and Deluxe sunglasses: (Click the icon to view the cost data.) (Click the icon to view additional information.) Assuming machine hours is a constraint, which model should Akil emphasize? 3. A local home improvement warehouse store shows the following product line income statement for the month. All common fixed costs are allocated to departments based on percentage of sales revenue generated by the department. B (Click the icon to view the product line income statement for the month.) Assuming $39,000 of the Lighting Department's direct fixed costs are avoidable, should the store managers discontinue the Lighting Department? The space currently occupied by the Lighting Department would be replaced with a Hardware Department that is expected to have sales of $210,000, variable costs of $85,000 and new direct fixed costs of $32,000. 2. Comfy Zone incurs the following costs for 25,000 pairs of its high-tech hiking socks: (Click the icon to view the costs.) (Click the icon to view additional information.) Identify and analyze the alternatives. What is the best course of action? Data Table Per Pair Standard Deluxe $ 23 $ 39 Sale price Variable expenses. 17 30 Print Done Data Table $ 20,000 Direct materials .. Direct labor. ... Variable manufacturing overhead 15,000 60,000 80,000 Fixed manufacturing overhead $ 175,000 Total manufacturing cost $ 7 Cost per pair ($175,000 - 25,000) Print Done Data Table A B E 1 2 Sales Paint Lumber Lighting Store Total $ 530,000 $ 350,000 $ 140,000 $ 1,020,000 250,000 110,000 66,000 426,000 3 Less: Variable Costs 4 Contribution margin 280,000 240,000 74,000 594,000 5 Less: Direct Fixed Costs 54,000 38,000 40,000 132,000 6 Less: Common Fixed Costs 150,000 79,000 35,000 264,000 $ 7 Operating Income (Loss) 76,000 $ 123,000 $ 1,000 $ 198,000 Requirement 1. Assuming machine hours is a constraint, which model should Akil emphasize? Product Mix Decision Standard Deluxe Less: Contribution margin per unit Multiply by: Multiply by: Total contribution margin at full capacity Akil should emphasize the model because it has the higher Requirement 2. Identify and analyze the alternatives. What is the best course of action? Begin by selecting the labels and calculating the net cost when Comfy Zone is making the socks, then calculate the net cost when Comfy Zone is outsourcing the socks when (1) the facilities are idle and when (2) the facilities are used to make other products. (Complete all input fields. Enter a zero for any zero amounts.) Outsource Socks Incremental Analysis Make Facilities Make Other Outsourcing Decision Socks Idle Products Plus: Total cost of producing 25,000 socks Less: Net cost Comfy Zone should because it results in a V net cost to the company. Requirement 3. Assuming $39,000 of the Lighting Department's direct fixed costs are avoidable, should the store managers discontinue the Lighting Department? The space currently occupied by the Lighting Department would be replaced with a Hardware Department that is expected to have sales of $210,000, variable costs of $85,000 and new direct fixed costs of $32,000. Incremental Analysis of Discontinuation Decision Total Less: Income lost if Lighting is discontinued Less: Segment margin provided by the Hardware Department Segment margin provided by the Hardware Department Net benefit of discontinuing the Lighting Department and replacing with a Hardware Department The store managers discontinue the Lighting Department because the segment margin provided by the Hardware Department the income lost if Lighting is discontinued. Requirements 1. Akil produces Standard and Deluxe sunglasses: (Click the icon to view the cost data.) (Click the icon to view additional information.) Assuming machine hours is a constraint, which model should Akil emphasize? 3. A local home improvement warehouse store shows the following product line income statement for the month. All common fixed costs are allocated to departments based on percentage of sales revenue generated by the department. B (Click the icon to view the product line income statement for the month.) Assuming $39,000 of the Lighting Department's direct fixed costs are avoidable, should the store managers discontinue the Lighting Department? The space currently occupied by the Lighting Department would be replaced with a Hardware Department that is expected to have sales of $210,000, variable costs of $85,000 and new direct fixed costs of $32,000. 2. Comfy Zone incurs the following costs for 25,000 pairs of its high-tech hiking socks: (Click the icon to view the costs.) (Click the icon to view additional information.) Identify and analyze the alternatives. What is the best course of action? Data Table Per Pair Standard Deluxe $ 23 $ 39 Sale price Variable expenses. 17 30 Print Done Data Table $ 20,000 Direct materials .. Direct labor. ... Variable manufacturing overhead 15,000 60,000 80,000 Fixed manufacturing overhead $ 175,000 Total manufacturing cost $ 7 Cost per pair ($175,000 - 25,000) Print Done Data Table A B E 1 2 Sales Paint Lumber Lighting Store Total $ 530,000 $ 350,000 $ 140,000 $ 1,020,000 250,000 110,000 66,000 426,000 3 Less: Variable Costs 4 Contribution margin 280,000 240,000 74,000 594,000 5 Less: Direct Fixed Costs 54,000 38,000 40,000 132,000 6 Less: Common Fixed Costs 150,000 79,000 35,000 264,000 $ 7 Operating Income (Loss) 76,000 $ 123,000 $ 1,000 $ 198,000 Requirement 1. Assuming machine hours is a constraint, which model should Akil emphasize? Product Mix Decision Standard Deluxe Less: Contribution margin per unit Multiply by: Multiply by: Total contribution margin at full capacity Akil should emphasize the model because it has the higher Requirement 2. Identify and analyze the alternatives. What is the best course of action? Begin by selecting the labels and calculating the net cost when Comfy Zone is making the socks, then calculate the net cost when Comfy Zone is outsourcing the socks when (1) the facilities are idle and when (2) the facilities are used to make other products. (Complete all input fields. Enter a zero for any zero amounts.) Outsource Socks Incremental Analysis Make Facilities Make Other Outsourcing Decision Socks Idle Products Plus: Total cost of producing 25,000 socks Less: Net cost Comfy Zone should because it results in a V net cost to the company. Requirement 3. Assuming $39,000 of the Lighting Department's direct fixed costs are avoidable, should the store managers discontinue the Lighting Department? The space currently occupied by the Lighting Department would be replaced with a Hardware Department that is expected to have sales of $210,000, variable costs of $85,000 and new direct fixed costs of $32,000. Incremental Analysis of Discontinuation Decision Total Less: Income lost if Lighting is discontinued Less: Segment margin provided by the Hardware Department Segment margin provided by the Hardware Department Net benefit of discontinuing the Lighting Department and replacing with a Hardware Department The store managers discontinue the Lighting Department because the segment margin provided by the Hardware Department the income lost if Lighting is discontinuedStep by Step Solution
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