ABC and CVP Analysis: Multiple Products Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Rose Violet Expected sales (in cases) 48,500 9,700 Selling price per case $98 $83 Direct labor hours 32,000 6,000 Machine hours 10,700 3,000 Receiving orders 50 24 Packing orders 96 50 Material cost per case $51 $45 Direct labor cost per case $11 $8 The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours. Fixed Variable Direct labor benefits $ — $163,400 Machine costs 211,000* 216,600 Receiving department 233,500 — Packing department 112,500 — Total costs $557,000 $380,000 * All depreciation Required: 1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number. Break-even cases of Rose Break-even cases of Violet 2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number. Break-even cases of Rose Break-even cases of Violet
ABC and CVP Analysis: Multiple Products Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Rose Violet Expected sales (in cases) 48,500 9,700 Selling price per case $98 $83 Direct labor hours 32,000 6,000 Machine hours 10,700 3,000 Receiving orders 50 24 Packing orders 96 50 Material cost per case $51 $45 Direct labor cost per case $11 $8 The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours. Fixed Variable Direct labor benefits $ — $163,400 Machine costs 211,000* 216,600 Receiving department 233,500 — Packing department 112,500 — Total costs $557,000 $380,000 * All depreciation Required: 1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number. Break-even cases of Rose Break-even cases of Violet 2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number. Break-even cases of Rose Break-even cases of Violet
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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ABC and CVP Analysis: Multiple Products
Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:
| Rose | Violet | |
|---|---|---|
| Expected sales (in cases) | 48,500 | 9,700 |
| Selling price per case | $98 | $83 |
| Direct labor hours | 32,000 | 6,000 |
| Machine hours | 10,700 | 3,000 |
| Receiving orders | 50 | 24 |
| Packing orders | 96 | 50 |
| Material cost per case | $51 | $45 |
| Direct labor cost per case | $11 | $8 |
The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours.
| Fixed | Variable | ||
|---|---|---|---|
| Direct labor benefits | $ — | $163,400 | |
| Machine costs | 211,000* | 216,600 | |
| Receiving department | 233,500 | — | |
| Packing department | 112,500 | — | |
| Total costs | $557,000 | $380,000 |
* All
Required:
1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number.
| Break-even cases of Rose | |
| Break-even cases of Violet |
2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number.
| Break-even cases of Rose | |
| Break-even cases of Violet |
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