odels: Basic and Enhanced. Development costs have amounted to $184,500 and $265,500, respectively. The total arket demand for each model is expected to be 42,000 units, and management anticipates being able to obtain the llowing market shares: Basic, 25 percent; Enhanced, 20 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Basic $ 355.00 44.00 23.50 38.00 197,000 10% Enhanced $ 455.00 70.50 32.00 50.00 310,000 10% Marketing and advertising (fixed but avoidable) Sales commissions* Computed on the basis of sales dollars. ince the start of development work on the Wireless Wizard, advances in technology have altered the market somewha nd management now believes that the company can introduce only one of the two models. Consultants confirmed this ct not too long ago, with Johnson and Gomez paying $34,700 for an in-depth market study. Sales salaries (excluding ommission) will be $86,500 no matter which product is sold. The marketing and advertising costs indicated for each roduct are incurred only if that product is sold. Other fixed overhead is expected to be the same, regardless of which

odels: Basic and Enhanced. Development costs have amounted to $184,500 and $265,500, respectively. The total arket demand for each model is expected to be 42,000 units, and management anticipates being able to obtain the llowing market shares: Basic, 25 percent; Enhanced, 20 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Basic $ 355.00 44.00 23.50 38.00 197,000 10% Enhanced $ 455.00 70.50 32.00 50.00 310,000 10% Marketing and advertising (fixed but avoidable) Sales commissions* Computed on the basis of sales dollars. ince the start of development work on the Wireless Wizard, advances in technology have altered the market somewha nd management now believes that the company can introduce only one of the two models. Consultants confirmed this ct not too long ago, with Johnson and Gomez paying $34,700 for an in-depth market study. Sales salaries (excluding ommission) will be $86,500 no matter which product is sold. The marketing and advertising costs indicated for each roduct are incurred only if that product is sold. Other fixed overhead is expected to be the same, regardless of which

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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Johnson and Gomez, Inc., is a small firm involved in the production and sale of electronic business products. The company is well known for its attention to quality and innovation. During the past 15 months, a new product has been under development that allows users improved access to e-mail and video images. Johnson and Gomez code named the product the Wireless Wizard and has been quietly designing two models: Basic and Enhanced. Development costs have amounted to $207,000 and $288,000, respectively. The total market demand for each model is expected to be 57,000 units, and management anticipates being able to obtain the following market shares: Basic, 25 percent; Enhanced, 20 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Marketing and advertising (fixed but avoidable) Sales commissions* Problem 14-46 Part 3 Req 3A *Computed on the basis of sales dollars. Since the start of development work on the…
Johnson and Gomez, Inc., is a small firm involved in the production and sale of electronic business products. The company is well known for its attention to quality and innovation. During the past 15 months, a new product has been under development that allows users improved access to e- mail and video images. Johnson and Gomez code named the product the Wireless Wizard and has been quietly designing two models: Basic and Enhanced. Development costs have amounted to $204,000 and $285,000, respectively. The total market demand for each model is expected to be 55,000 units, and management anticipates being able to obtain the following market shares: Basic, 30 percent; Enhanced, 25 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Marketing and advertising (fixed but avoidable) Sales commissions Basic $ 420.00…
Monty Company manufactures automobile components for the worldwide market. The company has three large production facilities in Virginia, New Jersey, and California, which have been operating for many years. Brett Harker, vice president of production, believes it is time to upgrade operations by implementing computer-integrated manufacturing (CIM) at one of the plants. Brett has asked corporate controller Connie Carson to gather information about the costs and benefits of implementing CIM. Carson has gathered the following data: Initial equipment cost $ 7,400,000 Working capital required at start-up $ 600,000 Salvage value of existing equipment $ 107,400 Annual operating cost savings $ 1,202,880 Salvage value of new equipment at end of its useful life $ 286,400 Working capital released at end of its useful life 2$ 600,000 Useful life of equipment 10 years Monty Company uses a 12% discount rate.
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Technology Accessories Inc. is a designer, manufacturer, and distributor of accessories for consumer electronic products. Early in 20Y3, the company began production of a leather cover for tablet computers, called the iLeather. The cover is made of stitched leather with a velvet interior and fits around most tablet computers. In January, $750,000 was spent on developing marketing and advertising materials. For the first six months of 20Y2, the company spent $1,400,000 promoting the iLeather. The product was ready for manufacture on January 21, 20Y3. Technology Accessories Inc. uses a job order cost system to accumulate costs for the iLeather. Direct materials unit costs for the iLeather are as follows:Leather $10.00Velvet 5.00Packaging 0.40Total $15.40The actual production process for the iLeather is fairly straightforward. First, leather is brought to a cutting and stitching…
Brik, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes: deluxe and standard. Because Brik can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data: E (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,900 machine hours per month. The plant can manufacture either 62 standard electric toothbrushes or 24 deluxe electric toothbrushes per machine hour. Read the requirements. ..... Requirement 1. Identify the constraining factor for Brik. Brik's constraint is Requirement 2. Prepare a product mix analysis to show which product line to emphasize. Deluxe Standard Toothbrushes Toothbrushes Data table Contribution margin per Per Unit Deluxe Standard Decision: Toothbrush Toothbrush Sales price 2$ 82 $ 54 22 18 Variable costs Emphasize the Brik standard electric toothbrush $ 60 $ 36…
Britt, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes: deluxe and standard. Because Britt can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data: E (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,000 machine hours per month. The plant can manufacture either 50 standard electric toothbrushes or 23 deluxe electric toothbrushes per machine hour. Read the requirements. Requirements Requirement 1. Identify the constraining factor for Britt. Britt's constraint is 1. Identify the constraining factor for Britt. 2. Prepare an analysis to show which productline to emphasize. direct materials labor hours Print Done machine hours Data Table Per Unit Deluxe Toothbrush Standard Toothbrush Sales price 82 $ 52 Variable costs 25 18 Contribution margin $ 57 $ 34 Contribution margin ratio…
Britt, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes. deluxe and standard. Because Britt can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data: E (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,000 machine hours per month. The plant can manufacture either 50 standard electric toothbrushes or 23 deluxe electric toothbrushes per machine hour Read the requirements. Requirement 1. Identify the constraining factor for Britt. Britt's constraint is Data Table direct materials labor hours Per Unit machine hours Deluxe Standard Toothbrush Toothbrush 82 $ 52 Sales price 25 18 Variable costs 57 $ 34 Contribution margin 69 5% 65.4% Contribution margin ratio Print Done Requirements 1. Identify the constraining factor for Britt. 2. Prepare an analysis to show which product line to…
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