Good Scent. Inc... produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Rose Violet 51.000 10.200 $99 $81 32.000 6.400 9,750 3,500 50 27 96 Expected sales (in cases) Selling price per case Direct labor hours Machine hours Receiving orders Packing orders Material cost per case Direct labor cost per case The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours. Fixed Variable Direct labor benefits Machine costs Receiving department Packing department Total costs All depreciation $ 182.500 214.500 136.500 $50 Break-even cases of Rose Break-even cases of Violet $11 45 $44 $5 $165.120 218,880 $533,500 $384,000 Required: 1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number. Break-even cases of Rose Break-even cases of Violet 2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number. cases cases cases cases
Good Scent. Inc... produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Rose Violet 51.000 10.200 $99 $81 32.000 6.400 9,750 3,500 50 27 96 Expected sales (in cases) Selling price per case Direct labor hours Machine hours Receiving orders Packing orders Material cost per case Direct labor cost per case The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours. Fixed Variable Direct labor benefits Machine costs Receiving department Packing department Total costs All depreciation $ 182.500 214.500 136.500 $50 Break-even cases of Rose Break-even cases of Violet $11 45 $44 $5 $165.120 218,880 $533,500 $384,000 Required: 1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number. Break-even cases of Rose Break-even cases of Violet 2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number. cases cases cases cases
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ABC and CVP Analysis: Multiple Products
Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:
Rose Violet
Expected sales (in cases)
Selling price per case
Direct labor hours
Machine hours
Direct labor benefits
Machine costs
Receiving department
Packing department
Total costs
Receiving orders
Packing orders
Material cost per case
Direct labor cost per case
$11
The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours.
Fixed
*All depreciation
$
51,000 10,200
$81
32,000 6,400
9,750
3,500
Break-even cases of Rose
Break-even cases of Violet
182,500
$99
214,500
136,500
$533,500
50
96
$50
27
45
$44
$5
Variable
$165,120
218,880
$384,000
Required:
1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number.
Break-even cases of Rose
Break-even cases of Violet
2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number.
cases
cases
cases
cases
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