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: Expected sales (in cases) Selling price per case Direct labor hours. Machine hours Receiving orders Packing orders. Material cost per case Direct labor cost per case Direct labor benefits. Machine costs Receiving department Packing department Total costs All depreciation Fixed $ $8 $9 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. Break-even cases of Rose Rose Break-even cases of Violet 53,000 10,600 $103 $81 33,500 6,400 10,850 3,100 52 Break-even cases of Rose 101 Break-even cases of Violet Violet $48 $191,520 190,000* 207,480 231,000 147,500 $568,500 $399,000 28 55 $42 Variable 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. X cases 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. cases cases cases
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: Expected sales (in cases) Selling price per case Direct labor hours. Machine hours Receiving orders Packing orders. Material cost per case Direct labor cost per case Direct labor benefits. Machine costs Receiving department Packing department Total costs All depreciation Fixed $ $8 $9 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. Break-even cases of Rose Rose Break-even cases of Violet 53,000 10,600 $103 $81 33,500 6,400 10,850 3,100 52 Break-even cases of Rose 101 Break-even cases of Violet Violet $48 $191,520 190,000* 207,480 231,000 147,500 $568,500 $399,000 28 55 $42 Variable 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. X cases 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. cases cases cases
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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:
Expected sales (in cases)
Selling price per case
Direct labor hours
Machine hours
Receiving orders
Packing orders
Material cost per case
Direct labor cost per case
Direct labor benefits
Machine costs
Receiving department
Packing department
Total costs
All depreciation
Fixed
$
$8 $9
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.
Break-even cases of Rose
Rose Violet
Break-even cases of Violet
53,000 10,600
$103 $81
6,400
3,100
Break-even cases of Rose
33,500
10,850
Break-even cases of Violet
52
101
Variable
$191,520
190,000* 207,480
231,000
147,500
$568,500 $399,000
$48
28
55
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.
$42
X cases
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.
cases
cases
cases
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