Gary is the operating manager of Crane, a company that manufactures three different types of all-terrain vehicles: four-wheelers, personal watercraft, and snowmobiles. Naturally, Gary has the opportunity to test all of these products for quality-control purposes. At the end of the year, Gary needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively. Four-Wheelers Personal Watercraft Snowmobiles Sales $1,126,000 $1,416,000 $1,996,000 Payroll Maintenance IT Four-Wheelers Watercraft Snowmobiles Costs $95,000 $116,000 $250,000 $850,000 $1,156,000 $1,745,000 Number of employees 2 3 4 20 18 27 Maintenance hours 100 200 150 1,800 750 1,300 IT hours 150 40 ง 220 800 1,250 900 (a) X Your answer is incorrect. Use Excel to allocate the three support department costs to the three product lines using the reciprocal method. (Round answers to 2 decimal places, eg. 15.25) 4-Wheelers Costs $ 298666.67 $ Operating Units Watercraft Snowmobiles $
Gary is the operating manager of Crane, a company that manufactures three different types of all-terrain vehicles: four-wheelers, personal watercraft, and snowmobiles. Naturally, Gary has the opportunity to test all of these products for quality-control purposes. At the end of the year, Gary needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively. Four-Wheelers Personal Watercraft Snowmobiles Sales $1,126,000 $1,416,000 $1,996,000 Payroll Maintenance IT Four-Wheelers Watercraft Snowmobiles Costs $95,000 $116,000 $250,000 $850,000 $1,156,000 $1,745,000 Number of employees 2 3 4 20 18 27 Maintenance hours 100 200 150 1,800 750 1,300 IT hours 150 40 ง 220 800 1,250 900 (a) X Your answer is incorrect. Use Excel to allocate the three support department costs to the three product lines using the reciprocal method. (Round answers to 2 decimal places, eg. 15.25) 4-Wheelers Costs $ 298666.67 $ Operating Units Watercraft Snowmobiles $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Gary is the operating manager of Crane, a company that manufactures three different types of all-terrain vehicles: four-wheelers,
personal watercraft, and snowmobiles. Naturally, Gary has the opportunity to test all of these products for quality-control purposes.
At the end of the year, Gary needs to perform a profitability analysis for each product line to better evaluate the company's pricing
strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see
what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three
support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance
hours used, and IT hours used, respectively.
Four-Wheelers
Personal Watercraft
Snowmobiles
Sales
$1,126,000
$1,416,000
$1,996,000
Payroll Maintenance
IT
Four-Wheelers
Watercraft
Snowmobiles
Costs
$95,000
$116,000
$250,000
$850,000
$1,156,000
$1,745,000
Number of employees
2
3
4
20
18
27
Maintenance hours
100
200
150
1,800
750
1,300
IT hours
150
40
ง
220
800
1,250
900
(a)
X Your answer is incorrect.
Use Excel to allocate the three support department costs to the three product lines using the reciprocal method. (Round answers
to 2 decimal places, eg. 15.25)
4-Wheelers
Costs
$
298666.67
$
Operating Units
Watercraft
Snowmobiles
$
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
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