Carlos Cavalas, the manager of Echo Products Brazilian Division, is trying to set the production schedule for the last quarter of the year. The Brazilian Division had planned to sell 67,210 units during the year, but by September 30 only the following activity had been reported: Inventory, January 11 Production Sales Inventory, September 30 The division can rent warehouse space to store up to 30,900 units. The minimum inventory level that the division should carry is 1,500 units. Mr. Cavalas is aware that production must be at least 6,060 units per quarter in order to retain a nucleus of key employees Maximum production capacity is 45,600 units per quarter. Units Demand has been soft, and the sales forecast for the last quarter is only 20,200 units. Due to the nature of the division's operations, fixed manufacturing overhead is a major element of product cost 0 71,200 61,100 10,100 Required: 1a. Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year? 1b. Assume that the division is using variable costing Will the number of units scheduled for production affect the division's reported income or loss for the year? 2. Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based on divisional operating income. If Mr. Cavalas wants to maximize his division's operating income for the year, how many units should be scheduled for production during the last quarter? Complete this question by entering your answers in the tabs below. Req 18 Reg 1A Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year? Required production Reg 2 units Rea 18
Carlos Cavalas, the manager of Echo Products Brazilian Division, is trying to set the production schedule for the last quarter of the year. The Brazilian Division had planned to sell 67,210 units during the year, but by September 30 only the following activity had been reported: Inventory, January 11 Production Sales Inventory, September 30 The division can rent warehouse space to store up to 30,900 units. The minimum inventory level that the division should carry is 1,500 units. Mr. Cavalas is aware that production must be at least 6,060 units per quarter in order to retain a nucleus of key employees Maximum production capacity is 45,600 units per quarter. Units Demand has been soft, and the sales forecast for the last quarter is only 20,200 units. Due to the nature of the division's operations, fixed manufacturing overhead is a major element of product cost 0 71,200 61,100 10,100 Required: 1a. Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year? 1b. Assume that the division is using variable costing Will the number of units scheduled for production affect the division's reported income or loss for the year? 2. Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based on divisional operating income. If Mr. Cavalas wants to maximize his division's operating income for the year, how many units should be scheduled for production during the last quarter? Complete this question by entering your answers in the tabs below. Req 18 Reg 1A Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year? Required production Reg 2 units Rea 18
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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subject-Accounting
Transcribed Image Text:Carlos Cavalas, the manager of Echo Products Brazilian Division, is trying to set the production schedule for the last quarter of the
year. The Brazilian Division had planned to sell 67,210 units during the year, but by September 30 only the following activity had been
reported:
Inventory, January 11
Production
Sales
Inventory, September 30
The division can rent warehouse space to store up to 30,900 units. The minimum inventory level that the division should carry is 1,500
units. Mr. Cavalas is aware that production must be at least 6,060 units per quarter in order to retain a nucleus of key employees
Maximum production capacity is 45,600 units per quarter.
Demand has been soft, and the sales forecast for the last quarter is only 20,200 units. Due to the nature of the division's operations,
fixed manufacturing overhead is a major element of product cost.
Units
Required:
1a. Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of
the year?
1b. Assume that the division is using variable costing. Will the number of units scheduled for production affect the division's reported
income or loss for the year?
2. Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based on divisional
operating income. If Mr. Cavalas wants to maximize his division's operating income for the year, how many units should be scheduled
for production during the last quarter?
Reg 1A
0
71,200
61,100
10,100
Complete this question by entering your answers in the tabs below.
Reg 18
Reg 2:
units
Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter
of the year?
Required production
Req 18 >
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