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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 Sales Four-Wheelers $1.126.000 Costs Number of employees Maintenance hours IT hours Personal Watercraft Payroll $95,000 2 100 150 $1,416,000 Maintenance 3 $116.000 $250,000 200 Snowmobiles $1,996,000 40 IT 4 150 220 Four-Wheelers Watercraft $850.000 20 1.800 600 $1,156.000 18 750 1.250 Snowmobiles $1,745,000 27 1,300 900

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 Sales Four-Wheelers $1.126.000 Costs Number of employees Maintenance hours IT hours Personal Watercraft Payroll $95,000 2 100 150 $1,416,000 Maintenance 3 $116.000 $250,000 200 Snowmobiles $1,996,000 40 IT 4 150 220 Four-Wheelers Watercraft $850.000 20 1.800 600 $1,156.000 18 750 1.250 Snowmobiles $1,745,000 27 1,300 900

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 performa 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. Sales Costs Four-Wheelers $1.126,000 Number of employees Maintenance hours IT hours Personal Watercraft $1,416,000 Payroll $95,000 2 100 150 Maintenance IT $116,000 $250,000 3 Snowmobiles $1,996,000 200 40 4 150 220 Watercraft $850,000 $1,156,000 Four-Wheelers 20 1.800 800 18 750 1.250 Snowmobiles $1,745,000 27 1,300 900 oz 52 82 82 V Ac Qu
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 performa 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. Sales Costs Four-Wheelers $1.126,000 Number of employees Maintenance hours IT hours Personal Watercraft $1,416,000 Payroll $95,000 2 100 150 Maintenance IT $116,000 $250,000 3 Snowmobiles $1,996,000 200 40 4 150 220 Watercraft $850,000 $1,156,000 Four-Wheelers 20 1.800 800 18 750 1.250 Snowmobiles $1,745,000 27 1,300 900 oz 52 82 82 V Ac Qu
(a) 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) Costs 4-Wheelers eTextbook and Media: Save for Later Operating Units Watercraft Snowmobiles Attempts: 0 of 3 used Total Submit Answer Ques Accou Viev Acco Que Accou Que Acco
Transcribed Image Text:(a) 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) Costs 4-Wheelers eTextbook and Media: Save for Later Operating Units Watercraft Snowmobiles Attempts: 0 of 3 used Total Submit Answer Ques Accou Viev Acco Que Accou Que Acco
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