McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn amargin of at least 20 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost.Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1show the following.Sales revenueDirect materialsDirect laborRequired:a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks.a-2. Which of the two products should be dropped?b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The companycost analyst estimates that overhead without the chair line will be $660,000. The revenue and costs for desks are expected to be thesame as last year. What is the estimated margin for desks in year 2?Req A1Complete this question by entering your answers in the tabs below.Chairs$1,046,500585,000130,000Req A2ChairsDesksDesks$1,950,000810,000300,000Profit Margin%%Req BBased on the CFO's new policy, calculate the profit margin for both chairs and desks.< Req A1Req A2 > McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn amargin of at least 20 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost.Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1show the following.Sales revenueDirect materialsDirect laborChairs$1,046,500585,000130,000Required:a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks.a-2. Which of the two products should be dropped?b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The companycost analyst estimates that overhead without the chair line will be $660,000. The revenue and costs for desks are expected to be thesame as last year. What is the estimated margin for desks in year 2?Req A1Complete this question by entering your answers in the tabs below.Reg A2Desks$1,950,000810,000300,000Req BEstimated margin for desks - Year 2Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. Thecompany cost analyst estimates that overhead without the chair line will be $660,000. The revenue and costs for desks areexpected to be the same as last year. What is the estimated margin for desks in year 2? (Enter your answer as a percentagerounded to 1 decimal place (i.e., 32.1).)%< Req A2Req B >Show less A

Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $660,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? Req A1 Chairs $1,046,500 585,000 130,000 Complete this question by entering your answers in the tabs below. Reg A2 Chairs Desks Desks $1,950,000 810,000 300,000 Req B Based on the CFO's new policy, calculate the profit margin for both chairs and desks. Profit Margin % %

Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $660,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? Req A1 Chairs $1,046,500 585,000 130,000 Complete this question by entering your answers in the tabs below. Reg A2 Chairs Desks Desks $1,950,000 810,000 300,000 Req B Based on the CFO's new policy, calculate the profit margin for both chairs and desks. Profit Margin % %

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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A company reports the following contribution margin income statement. Contribution Margin Income Statement For Year Ended December 31 Sales (19,200 units at $22.50 each) Variable costs (19,200 units at $18.00 each) Contribution margin. Fixed costs Income The manager believes the company can increase sales volume to 22,000 total units by increasing advertising costs by $16,200. Required A Required B Complete this question by entering your answers in the tabs below. Contribution Margin Income Statement For Year Ended December 31 $ 432,000 345,600 Prepare a contribution margin income statement assuming the company incurs the additional advertising costs and sales volume increases to 22,000 units. Sales Variable costs Contribution margin 86,400 64,800 $ 21,600 Fixed costs Income
The following information pertains to the first year of operation for Crystal Cold Coolers Inc.: Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($224,000/2,800 units) Total variable selling expenses ($11 per unit sold) Total fixed general and administrative expenses Complete this question by entering your answers in the tabs below. Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year. Full Absorption Costing 2,800 2,400 340 60 45 13 80 Variable Costing $ 26,400 $ 60,000
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Fanning Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Direct labor Direct materials Fringe Benefits: Home 1 2 Assume Fanning needs to allocate two major overhead costs ($34,600 of employee fringe benefits and $25,740 of indirect materials costs) among the three jobs. 3 Total Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. Note: Round "Allocation rate" to 2 decimal places. Indirect Materials: Home 1 2 3 Total Expected Costs Direct labor Direct materials Fringe benefits Indirect materials Allocation Rate Total cost Home 1 $ 71,000 92,000 $ $ $ 0.10 0.10 0.10 Allocation Rate X $ 71,000 X X X x X Home 2 $ 99,000 141,000 x X Weight of Base The cost components to determine the total cost of each house: Home 1 Home 2 $ 71,000 $ 71,000 $ 99,000 $ 176,000 Weight of Base Home 3 $ 176,000 196,000 $ 0 = = =…
Exercise 9-31 (Algo) Reported Costs and Decisions (LO 9-1) McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 15 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $880,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Chairs Desks Sales revenue $ 1,001,000 $ 2,469,600 Direct materials 598,000 940,000 Direct labor 120,000 430,000 Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $790,000. The…
roblems) At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead costs, $760,000, and direct materials costs, $400,000.At year-end, the company reports that actual overhead costs for the year are $769,600 and actual direct materials costs for the year are $400,000. 1. Determine the predetermined overhead rate using estimated direct materials costs 2. Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year. 3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the predetermined overhead rate. Determine whether…
Gallatin County Motors Inc. assembles and sells snowmobile engines.The company began operations on July 1 and operated at 100% ofcapacity during the first month. The attached data summarize theresults for July: a. Prepare an income statement according to the absorptioncosting concept.b. Prepare an income statement according to the variable costingconcept.c. What is the reason for the difference in the amount of operatingincome reported in (a) and (b)?