e components and capability to "fill" the room with sound. am at Ferry is completing the planning for the coming quarter. Information ollow: ed s -hours Silver 2,000 590 600 Gold 1,500 2,100 1,200 Platinum 500 1,050 750 Tota 4, 3, 2, 432 ..
e components and capability to "fill" the room with sound. am at Ferry is completing the planning for the coming quarter. Information ollow: ed s -hours Silver 2,000 590 600 Gold 1,500 2,100 1,200 Platinum 500 1,050 750 Tota 4, 3, 2, 432 ..
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Gadubhai
![Required information
[The following information applies to the questions displayed below.]
Ferry Electronics produces a wide variety of video and audio systems for home entertainment. One of the Ferry plants
(Lakeview) produces home theatre systems. The plant produces three models, Silver, Gold, and Platinum, which differ in
the quality of the components and capability to "fill" the room with sound.
The financial team at Ferry is completing the planning for the coming quarter. Information on volumes and costs expected
for the quarter follow:
Units produced
Machine-hours
Direct labor-hours
Revenues
Direct materials costs
Direct labor costs
Manufacturing overhead
Operating Profit
Unit sales
Silver
2,000
590
600
Silver
$ 583,600
310,000
9,600
units
Gold
1,500
2,100
1,200
Gold
$ 793,050
533,250
28,800
The team has been discussing two issues. First, there is disagreement about how best to allocate the manufacturing
overhead among the products. The current cost accounting system allocates manufacturing overhead to products based
on expected unit sales. (Because Ferry carries no inventory, unit sales are equal to units produced.) Second, there is a
concern about a "softening" in the demand for these systems and the managers at Ferry want to get a better
understanding of possible financial implications if demand should be weaker than expected.
units
b. Assume that the expected sales mix will remain the same regardless of the total volume of sales. Assume for this requirement only
that the the entire manufacturing overhead can be considered a fixed cost. At the breakeven volume in units, what are the unit sales
for each of the three products?
Platinum
500
1,050
750
$ 493,350
303,000
25, 350
Platinum
Total
units
4,000
3,740
2,550
$ 1,870,000
1,146,250
63,750
561,000
$ 99,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F499985bc-1928-4b24-a8ec-2bf1517f9b1d%2Ff9ba8832-4a5b-4108-921d-06eac2bd37e3%2Fn5mvgqi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Ferry Electronics produces a wide variety of video and audio systems for home entertainment. One of the Ferry plants
(Lakeview) produces home theatre systems. The plant produces three models, Silver, Gold, and Platinum, which differ in
the quality of the components and capability to "fill" the room with sound.
The financial team at Ferry is completing the planning for the coming quarter. Information on volumes and costs expected
for the quarter follow:
Units produced
Machine-hours
Direct labor-hours
Revenues
Direct materials costs
Direct labor costs
Manufacturing overhead
Operating Profit
Unit sales
Silver
2,000
590
600
Silver
$ 583,600
310,000
9,600
units
Gold
1,500
2,100
1,200
Gold
$ 793,050
533,250
28,800
The team has been discussing two issues. First, there is disagreement about how best to allocate the manufacturing
overhead among the products. The current cost accounting system allocates manufacturing overhead to products based
on expected unit sales. (Because Ferry carries no inventory, unit sales are equal to units produced.) Second, there is a
concern about a "softening" in the demand for these systems and the managers at Ferry want to get a better
understanding of possible financial implications if demand should be weaker than expected.
units
b. Assume that the expected sales mix will remain the same regardless of the total volume of sales. Assume for this requirement only
that the the entire manufacturing overhead can be considered a fixed cost. At the breakeven volume in units, what are the unit sales
for each of the three products?
Platinum
500
1,050
750
$ 493,350
303,000
25, 350
Platinum
Total
units
4,000
3,740
2,550
$ 1,870,000
1,146,250
63,750
561,000
$ 99,000
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