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SLOgo, LLC manufactures two product lines: paddleboards and kayaks. The manager of each product line is held responsible for generating revenue and controlling costs. The
SLOgo, LLC manufactures two product lines: paddleboards and kayaks. The manager of each product line is held responsible for generating revenue and controlling costs. The following controllable income and expense amounts were compiled for the prior quarter: paddleboards kayaks sales $72,000 $68,000 (variable costs) (28,800) (37,400) contribution margin 43,200 30,600 traceable fixed costs (15,000) (17,800) "operating income" $28,200 $12,800 Not included in the above amounts are charges for each product line's use of two service departments: storage and distribution. For purposes of performance evaluation, the service department charges are considered variable. The company has a 1,000 square foot storage warehouse. Square footage is the activity base used to charge each product line for quarterly storage costs of $3,000. 55% of the warehouse square footage is for paddleboard storage. The remaining square footage is for kayak storage. Distribution costs are charged back to the product lines at a rate of $12.50 per trip. During the quarter, 72 trips were made for the paddleboard line and 90 trips were made for the kayak line. The CEO's annual salary of $96,000 is considered a common fixed cost and is equally allocated to each product line. QUESTION 1: Based on the information give, the product lines are considered centers. QUESTION 2: Based on the above data, on which amounts should the performanc investment roduct lines be evalulated? cost paddleboards ($22,050); kayaks ($37,675) naddleboards $26.750: kayaks $11.225 profit QUESTION 2: Based on the above data, on which amounts should the performance of the two product lines be evalulated? paddleboards ($22,050); kayaks ($37,675) paddleboards $26,750; kayaks $11,225 paddleboards $25,650; kayaks $10,325 paddleboards $13,950; kayaks ($1,675) paddleboards $28,200; kayaks $12,800 QUESTION 3: Before evaluating the performance of each product line, what else would you need to know? the cost of goods sold and selling and administrative expenses for each product line if the service department charges are considered controllable costs the expected segment margin of each product line any additional common fixed costs incurred by the company other than the CEO's salary the company's overall operating income
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