Homework Help is Here – Start Your Trial Now!
Business
Accounting
BCS's management has set a strategic goal to improve both product and customer profitability. A related subgoal that supports this strategy is to identify profitable products and customers using an accurate cost-accounting system. BCS currently uses a simple cost-accounting system to calculate both product and customer profitability. The only direct costs are the purchase costs of footwear and equipment products. BCS allocates indirect costs to the product groups using a single indirect cost pool for all indirect costs with "pounds of product" as the cost allocation base. Cost and operating data accumulated for the most recent year follow:

BCS's management has set a strategic goal to improve both product and customer profitability. A related subgoal that supports this strategy is to identify profitable products and customers using an accurate cost-accounting system. BCS currently uses a simple cost-accounting system to calculate both product and customer profitability. The only direct costs are the purchase costs of footwear and equipment products. BCS allocates indirect costs to the product groups using a single indirect cost pool for all indirect costs with "pounds of product" as the cost allocation base. Cost and operating data accumulated for the most recent year follow:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

jj1

Brook Cities Sports (BCS) is a distributor of sports footwear and equipment. (Click the icon to view product and customer type information.) BCS's management has set a strategic goal to improve both product and customer profitability. A related subgoal that supports this strategy is to identify profitable products and customers using an accurate cost-accounting system. BCS currently uses a simple cost-accounting system to calculate both product and customer profitability. The only direct costs are the purchase costs of footwear and equipment products. BCS allocates indirect costs to the product groups using a single indirect cost pool for all indirect costs with "pounds of product" as the cost allocation base. Cost and operating data accumulated for the most recent year follow: (Click the icon to view the cost and operating data.) Read the requirements. Requirement 1. Prepare a schedule that shows the gross margin of each product group. Footwear Equipment Sales Cost of sales *** Purchase cost Indirect cost Total cost of sales Gross product margin Requirement 2. Prepare a schedule that shows the gross margin of each customer type. (Round gross margin per case amounts to the nearest cent.) Footwear Equipment Gross margin per case Specialty Stores Department Stores Cases sold Gross margin Cases sold Gross margin Requirement 3. Based on your answers to numbers 1 and 2, recommend a strategy to improve customer profitability. The gross margin per case of equipment is larger so more emphasis should be placed on equipment sales, especially at department stores.
Transcribed Image Text:Brook Cities Sports (BCS) is a distributor of sports footwear and equipment. (Click the icon to view product and customer type information.) BCS's management has set a strategic goal to improve both product and customer profitability. A related subgoal that supports this strategy is to identify profitable products and customers using an accurate cost-accounting system. BCS currently uses a simple cost-accounting system to calculate both product and customer profitability. The only direct costs are the purchase costs of footwear and equipment products. BCS allocates indirect costs to the product groups using a single indirect cost pool for all indirect costs with "pounds of product" as the cost allocation base. Cost and operating data accumulated for the most recent year follow: (Click the icon to view the cost and operating data.) Read the requirements. Requirement 1. Prepare a schedule that shows the gross margin of each product group. Footwear Equipment Sales Cost of sales *** Purchase cost Indirect cost Total cost of sales Gross product margin Requirement 2. Prepare a schedule that shows the gross margin of each customer type. (Round gross margin per case amounts to the nearest cent.) Footwear Equipment Gross margin per case Specialty Stores Department Stores Cases sold Gross margin Cases sold Gross margin Requirement 3. Based on your answers to numbers 1 and 2, recommend a strategy to improve customer profitability. The gross margin per case of equipment is larger so more emphasis should be placed on equipment sales, especially at department stores.
Data table Product Data Annual demand in cases Average purchase cost per case Average weight per purchased case Average sales price per case Stores Footwear demand in cases Equipment demand in cases Total annual demand in cases Orders Footwear Customer Data 2,800 $ 85 19.25 pounds $ 460 Print Specialty Stores 1,100 300 1,400 140 Equipment Done 2,000 $ 125 30.5 pounds $ 805 The cost-allocation base used to allocate this pool to the two product groups is pounds of product sold. Department Other Data A single cost pool consists of resources needed to perform receiving. storing, picking, packing, shipping, order processing, and customer service activities. The annual cost of these resources is $1,378,800. 1,700 1,700 3,400 68
Transcribed Image Text:Data table Product Data Annual demand in cases Average purchase cost per case Average weight per purchased case Average sales price per case Stores Footwear demand in cases Equipment demand in cases Total annual demand in cases Orders Footwear Customer Data 2,800 $ 85 19.25 pounds $ 460 Print Specialty Stores 1,100 300 1,400 140 Equipment Done 2,000 $ 125 30.5 pounds $ 805 The cost-allocation base used to allocate this pool to the two product groups is pounds of product sold. Department Other Data A single cost pool consists of resources needed to perform receiving. storing, picking, packing, shipping, order processing, and customer service activities. The annual cost of these resources is $1,378,800. 1,700 1,700 3,400 68
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Ethical Decision Making
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS