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 Silver 2,000 590 600 Gold 1,500 Platinum Total 500 4,000 2,100 1,050 3,740 1,200 750 2,550 Revenues Direct materials costs Direct labor costs $ 583,600 310,000 9,600 $ 793,050 $ 493,350 $ 1,870,000 533,250 28,800 303,000 25,350 Manufacturing overhead 1,146,250 63,750 561,000 Operating Profit $ 99,000 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. One of the team members points out that contribution margin is just revenues less variable costs and suggests the team use a single allocation base, contribution margin. f. Compute profits per unit by product line based on the expected (not breakeven) sales by product line allocating overhead costs by relative total contribution margins given expected sales. Note: Round your answers to 2 decimal places. Silver Profit per unit Gold Platinum
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 Silver 2,000 590 600 Gold 1,500 Platinum Total 500 4,000 2,100 1,050 3,740 1,200 750 2,550 Revenues Direct materials costs Direct labor costs $ 583,600 310,000 9,600 $ 793,050 $ 493,350 $ 1,870,000 533,250 28,800 303,000 25,350 Manufacturing overhead 1,146,250 63,750 561,000 Operating Profit $ 99,000 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. One of the team members points out that contribution margin is just revenues less variable costs and suggests the team use a single allocation base, contribution margin. f. Compute profits per unit by product line based on the expected (not breakeven) sales by product line allocating overhead costs by relative total contribution margins given expected sales. Note: Round your answers to 2 decimal places. Silver Profit per unit Gold Platinum
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Vijay
Transcribed Image Text: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
Silver
2,000
590
600
Gold
1,500
Platinum
Total
500
4,000
2,100
1,050
3,740
1,200
750
2,550
Revenues
Direct materials costs
Direct labor costs
$ 583,600
310,000
9,600
$ 793,050
$ 493,350
$ 1,870,000
533,250
28,800
303,000
25,350
Manufacturing overhead
1,146,250
63,750
561,000
Operating Profit
$ 99,000
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.
One of the team members points out that contribution margin is just revenues less variable costs and suggests the team use a single
allocation base, contribution margin.
f. Compute profits per unit by product line based on the expected (not breakeven) sales by product line allocating overhead costs by
relative total contribution margins given expected sales.
Note: Round your answers to 2 decimal places.
Silver
Profit per unit
Gold
Platinum
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