< > S C Making the Connection - Cha 1. MTC.01 Progress: 1/1 items Assignment Score: 41.18% S v2.cengagenow.com Course: S... W How to De... G How To W... m https://mo... m https://mo... Cengage... B Brainfuse... G how scre... CableTech Bell Corporation (CTB) operates in the telecommunications industry. CTB has two divisions: the Phone Division and the Cable Service Division. The Phone Division manufactures telephones in several plants located in the Midwest. The product lines run from relatively inexpensive touch-tone wall and desk phones to expensive, high-quality cellular phones. CTB also operates a cable TV service in Ohio. The Cable Service Division offers three products: a basic package with 25 channels; an enhanced package, which is the basic package plus 35 additional channels and two movie channels; and a premium package, which is the basic package plus 55 additional channels and six movie channels. The Cable Service Division reported the following activity for the month of March: Basic Enhanced Premium Sales (units) 50,000 500,000 300,000 Price per unit $32 $60 $90 Unit costs: Directly $6 $18 $36 traced Driver $4 $8 $26 $12 $30 traced Allocated $20 The unit costs are divided as follows: 70 percent production and 30 percent marketing and customer service. Direct labor cost is the only driver used for tracing. Typically, the division uses only production costs to define unit costs. The preceding unit product cost information was provided at the request of the marketing manager and was the result of a special study. Bryce Youngers, the president of CTB, is reasonably satisfied with the performance of the Cable Service Division. March's performance is fairly typical of what has been happening over the past two years. The Phone Division, however, is another matter. Its overall profit performance has been declining. Two years ago, income before income taxes had been about 25 percent of sales. March's dismal performance was also typical for what has been happening this year and is expected to continue- unless some action by management is taken to reverse the trend. During March, the Phone Division reported the following results: Inventories: Materials, March 1 Materials, March 31 Work in process, March 1 Work in process, March 31 $23,000 40,000 130,000 45,000 Finished goods, March 1 480,000 Finished goods, March 31 375,000 Costs: Direct labor $117,000 Plant and equipment 50,000 depreciation Materials handling 85,000 Inspections 60,000 Scheduling 30,000 Power 30,000 Plant supervision 12,000 Manufacturing engineering 21,000 Sales commissions 120,000 Salary, sales supervisor Supplies 10,000 17,000 40,000 Warranty work Rework 30,000 During March, the Phone Division purchased materials totaling $312,000. There are no significant inventories of supplies (beginning or ending). Supplies are accounted for separately from materials. CTB's Phone Division had sales totaling $1,170,000 for March. Based on March's results, Bryce decided to meet with three of the Phone Division's managers: Kim Breashears, divisional manager; Jacob Carder, divisional controller; and Larry Hartley, sales manager. A transcript of their recorded conversation is given next: Bryce: "March's profit performance is down once again, and I think we need to see if we can identify the problem and correct it-before it's too late. Kim, what's your assessment of the situation?" Kim: "Foreign competition is eating us alive-selling phones at a lower price and high quality. If we could lower our prices by 10 to 15 percent, I think that we'd regain most of our lost market share. But we also need to make sure that the quality of our products meets that of our competitors. We are spending a lot of money each month on inspection, rework, and warranties. I'd like to see these costs cut by at least 50 percent. If we could do that by improving quality, then customers would be more satisfied with our products, and we would not only romain our marksat chara hut increase it "| Check My Work All work saved. Email Instructor Save and Exit Submit Assignment for Gradi 66 Good A