Lakeside Accessories manufactures computer backpacks, messenger bags, and other items for carrying electronics, documents, and so on. in developing a new bag for the newest release of laptops, the design group has estimated the following unit costs: Fabric Leather Direct labor hours - Sewing Direct labor hours - Assembly $ 33 14 1.4 1.0 Direct labor at Lakeside Accessories earns $32 per hour for sewing and $27 per hour for assembly. Overhead is estimated for new products at 40 percent of direct labor cost. Lakeside has a target operating profit of 19 percent (as a percentage of costs) on this type of product. The marketing team has estimated that a price of $167 is expected for the bag. Required: a-1. What is the profit as a percentage of cost achieved under this alternative? a-2 Will Lakeside Accessories achieve the target operating profit for this product? b-1. The product manager, who is the company's main advocate for this new design, tells you that the he plans to have all the labor (sewing and assembly) done by the assembly labor, because "It is not all that difficult." Under the new plan for producing the bags. what is the profit as a percentage of cost achieved under this alternative? b-2. Under the new plan for producing the bags, will Lakeside Accessories achieve the target operating profit for this bag? Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 What is the profit as a percentage of cost achieved under this alternative? Note: Round your answer to two decimal places (i.e..1234 = 12.34%).
Lakeside Accessories manufactures computer backpacks, messenger bags, and other items for carrying electronics, documents, and so on. in developing a new bag for the newest release of laptops, the design group has estimated the following unit costs: Fabric Leather Direct labor hours - Sewing Direct labor hours - Assembly $ 33 14 1.4 1.0 Direct labor at Lakeside Accessories earns $32 per hour for sewing and $27 per hour for assembly. Overhead is estimated for new products at 40 percent of direct labor cost. Lakeside has a target operating profit of 19 percent (as a percentage of costs) on this type of product. The marketing team has estimated that a price of $167 is expected for the bag. Required: a-1. What is the profit as a percentage of cost achieved under this alternative? a-2 Will Lakeside Accessories achieve the target operating profit for this product? b-1. The product manager, who is the company's main advocate for this new design, tells you that the he plans to have all the labor (sewing and assembly) done by the assembly labor, because "It is not all that difficult." Under the new plan for producing the bags. what is the profit as a percentage of cost achieved under this alternative? b-2. Under the new plan for producing the bags, will Lakeside Accessories achieve the target operating profit for this bag? Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 What is the profit as a percentage of cost achieved under this alternative? Note: Round your answer to two decimal places (i.e..1234 = 12.34%).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Lakeside Accessories manufactures computer backpacks, messenger bags, and other items for carrying electronics, documents, and
so on. In developing a new bag for the newest release of laptops, the design group has estimated the following unit costs:
Fabric
Leather
Direct labor hours - Sewing
Direct labor hours Assembly
$33
14
1.4
1.0
Direct labor at Lakeside Accessories earns $32 per hour for sewing and $27 per hour for assembly. Overhead is estimated for new
products at 40 percent of direct labor cost. Lakeside has a target operating profit of 19 percent (as a percentage of costs) on this type
of product. The marketing team has estimated that a price of $167 is expected for the bag.
Required:
a-1. What is the profit as a percentage of cost achieved under this alternative?
a-2. Will Lakeside Accessories achieve the target operating profit for this product?
have all the labor
b-1. The product manager, who is the company's main advocate for this new design, tells you that the he plans
(sewing and assembly) done by the assembly labor, because it is not all that difficult." Under the new plan for producing the bags.
what is the profit as a percentage of cost achieved under this alternative?
b-2. Under the new plan for producing the bags, will Lakeside Accessories achieve the target operating profit for this bag?
Complete this question by entering your answers in the tabs below.
Required A1 Required A2 Required B1 Required B2
What is the profit as a percentage of cost achieved under this alternative?
Note: Round your answer to two decimal places (i.e. .1234 = 12.34%).
Profit as a percentage of cost
%
Expert Solution
Step 1: Introduction:
Variable costs are those costs which changes along with change in activity level. Fixed costs do not change with change in activity level. Overhead costs means all type of indirect costs and expenses being incurred in business.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.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