Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Doon Company manufactures en electronic component, ZF98. This component is significantly loss expensive than similar products sold by Doon's competitors. Order-processing time is very short,
Doon Company manufactures en electronic component, ZF98. This component is significantly loss expensive than similar products sold by Doon's competitors. Order-processing time is very short, however, approacimately 10% of products are defective and retumed by the customer. Returns and refunds are handled promptly. Yorunt Manufacturing, Doon's main competitor, hes a higher-priced product with almost no defects but a longer order processing time. Assume that in 2019, Doon has changed its processes and trained workers to recognize quality problems and other before products are finished and shipped to customers. Quality is now at an acceptable level. Cost per kilogram of materials is about the same as before, but conversion costs are higher and Doon THE i wprich in will Irk Swindlurni SH DER TITEL I ulily wind polisille You In cul I (2019) X (2018) X Data Table More info - X answers to the nearest whole do 2018 2010 10. Units of ZP98 produced and sold 5 000 7,200 CLIVE se lahhhhh pred pily line in HIT ! 1b. Units of ZP98 returned 550 250 ZP98 units that can be produced, not the actual units produced Selling and 10. Net soos in units 5 350 8,050 CUMHVISH Costs Spend on the number of customers that can can support, not the act number of customers it a Doanhas customers in 2. Selling prica 3 57 2018 and 75 customers in 2019. At the start of each year, management uses its 3 Direct material kilograms) used 9 100 3,725 discretion to determine the number of advertising staff for the year Advertising statt and its costs have no direct relationship with the quantity of ZP98 units produced 4. Direct material Courogram 3 11.00 3 11.00 and sold or the number of customers who buy ZP98 5 Manufacturing capacity in units of ZP98 9000 9,000 Total conversion costs 3 90,000 $ 153,000 Print Done 7. Conversion cost per unit of capacity 3 10 S 17 8 Selling and customer service capacity 75 customers 75 customers Total selling and customer service costs 3 4,300 S 4,500 10. Selling and customer service capacity cost per customer 57.33 $ 0000 11. Advertising stall 2 2 12 Total advertising costs 52,000 $ 14,000 13. Advertising cost per employee 26.000 3 32,000 Requirement 1. Calculate the change in operating income of Doon Company in 2018 and 2019. (Round your answers to the nearest whole dollar.) 2018 2019 Revenues Less: Sales returns LUI Net revenue Costs Direct material costs Conversion costs Selling and customer service costs Advertising costs Total costs Operating income The change in operating income from 2018 to 2019 is (Label the change in operating income as favourable (F) or unfavourable (U).) follow Required Requirement 2 Calculate the growth price recovery and productivity components that explain the change in operating income from 2010 to Tat you use th papup to dubly the components call the formula Click to view the components you will use in your formulas) in by determining the format cicle the revente necat cal growth Thenter the amounts in the formule RHUUR will at X A Actual units of capacity in 2018 Hinpul price in 2019 Actual units of capacity in 2019 I Price par unit of capacity in 2018 C Actual units of input ubod to produco 2016 output J Price per unit of capacity in 2010 D Actual units of input used to produce 2010 output k selling price in 2018 E Actual units of output sold in 2018 Laling price in 2010 F Actual units of output sold in 2018 M units of input required to produce 2019 autput in 2010 Gipul prin Pa N Intxapely curto pra 2018 cu putin 2011 Print Done Next, determine the formula to calculate the cost effect of growth for variable costs. Then anter the amounts in the formuls. Think based upon the information provided to you about which cost is variable Hold all decimals in interim calculations. Round each answer to the norest whole dollar Cost effect of growth for variable costs X Detomino tho fomula to calculate the cost offct of growth for food costs. Then, enter the amounts in tho formula. Calculate the cost offcct of growth for conversion costs first, thor for soling and customer corvice costs, and finally for advertising costs. (If any of the amounts to be ontered aro zoro, please entor") ) x Can will rewih ter lixwc cxt 1 - conversion costs selling and customer service costs HER Calculate the not change in operating income due to the growth component. Be sure to abol each component as to whether the amount has a favourable effect or an unfavourable effect on operating income. (Label ach component as favourable (F) unfavourable (UB) Reventeellect of growth Cost affect of growth Chan in aparting income un rowth Calculate the productivity componont of the change in oporating income. Bogin with the cost offoct of productivity for variable costs. Soloct the formula you will nood, and thon onto the amounts to calculate thorovonuo offoct of productivity. Round your answers to the nearest whole dollar) Castellect al productivity for varishi Dotermino the formuls to calculate the cost effect of productivity for fixed costs. Then, onter the amounts in the formula. Calculate the cost offect of productivity for conversion costs first, then for selling and customer service costs, and finally for advertising costs (if any of the amounts to be entered are zero, please enter"0" Costinct of productivity for face conversion seling and customer service costs advertising costs Calculate the nel change in operating incam do the productivity component Be sure to blach component to whether the months curable factoren anforveure efect on pering incon (if there is no local anders and love the dropdown blank. If there is an act Isbel the components tavourable (F) or unfavourable (US) Change in operating income due to productivity Requirement 3. Comment on your answer in roquirement 2. What do these components indicato? The analysis of operating income indicates that a significant amount of the in operating incomo resulted from Doon's strategy. The company was able to continue to while growing sales. Daon
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started