CR Company makes a household appliance with model number E400. The goal for 2017 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of E400 units that can be produced. The following additional data are available for 2016 and 2017: 2016 2017 Units of E400 produced and sold 12,000 13,800 Selling price $145 $140 Direct materials (square feet) 36,000 34,800 Direct manufacture costs per square foot $13 $15 Manufacturing capacity for X400 (units) 14,000 13,900 Total conversion costs $406,000 $403,100 Conversion costs per units of capacity $29 $29 Calculate the amount for growth, price-recovery, and productivity component that explain the change in operating income from 2016 to 2017
CR Company makes a household appliance with model number E400. The goal for 2017 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of E400 units that can be produced. The following additional data are available for 2016 and 2017: 2016 2017 Units of E400 produced and sold 12,000 13,800 Selling price $145 $140 Direct materials (square feet) 36,000 34,800 Direct manufacture costs per square foot $13 $15 Manufacturing capacity for X400 (units) 14,000 13,900 Total conversion costs $406,000 $403,100 Conversion costs per units of capacity $29 $29 Calculate the amount for growth, price-recovery, and productivity component that explain the change in operating income from 2016 to 2017
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
CR Company makes a household appliance with model number E400. The goal for 2017 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of E400 units that can be produced. The following additional data are available for 2016 and 2017:
| 2016 | 2017 | |
| Units of E400 produced and sold | 12,000 | 13,800 |
| Selling price | $145 | $140 |
| Direct materials (square feet) | 36,000 | 34,800 |
| Direct |
$13 | $15 |
| Manufacturing capacity for X400 (units) | 14,000 |
13,900 |
| Total conversion costs | $406,000 | $403,100 |
| Conversion costs per units of capacity | $29 | $29 |
- Calculate the amount for growth, price-recovery, and productivity component that explain the change in operating income from 2016 to 2017.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
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
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education