PLEASE PROVIDE STEP BY STEP SOLUTIONS TO ALL WORK CALCULATIONS! THANK YOU! Sales mix Cellular Communications manufactures cell phones and two cell phone accessories: ear buds and a 12-volt (automotive) battery charger. (Each ear bud package contains a set of ear buds.) The ear buds and charger are compatible only with the Matrix cell phone. Sales prices and variable costs for each product are as follows: Cell Phones Set of Ear Buds Charger Sales $75 $20 $20 Variable production costs (60) (4) (5) Variable selling costs (4) (1) (2) Contribution margin $11 $15 $13 Unit sales (next year’s budget) 1,400,000 400,000 200,000 The historical data of Cellular Communications suggest that, for each of the seven cell phones sold, two ear bud sets and one battery charger are sold. The company is currently exploring two options to increase overall corporate income for the upcoming year. The alternatives that follow would maintain the historical sales mix ratios: 1. Increase corporate advertising by $1,000,000. The company estimates doing so would increase total unit sales to 2,200,000. 2. Decrease the price of cell phones to $70. The company estimates doing so would increase cell phone sales to 3,150,000 units and have no effect on the unit selling price of the other products. Determine the effect of each proposal on budgeted profits for the coming year. Which alternative is preferred, and what is the relative financial benefit of that alternative? Incremental benefit of choosing option one: $Answer Incremental benefit of choosing option two: $Answer Choose option number Answer resulting in additional profits of $Answer over the other option.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
PLEASE PROVIDE STEP BY STEP SOLUTIONS TO ALL WORK CALCULATIONS! THANK YOU!
Sales mix
Cellular Communications manufactures cell phones and two cell phone accessories: ear buds and a 12-volt (automotive) battery charger. (Each ear bud package contains a set of ear buds.) The ear buds and charger are compatible only with the Matrix cell phone. Sales prices and variable costs for each product are as follows:
| Cell Phones | Set of Ear Buds | Charger | |
|---|---|---|---|
| Sales | $75 | $20 | $20 |
| Variable production costs | (60) | (4) | (5) |
| Variable selling costs | (4) | (1) | (2) |
| Contribution margin | $11 | $15 | $13 |
| Unit sales (next year’s budget) | 1,400,000 | 400,000 | 200,000 |
The historical data of Cellular Communications suggest that, for each of the seven cell phones sold, two ear bud sets and one battery charger are sold. The company is currently exploring two options to increase overall corporate income for the upcoming year. The alternatives that follow would maintain the historical sales mix ratios:
1. Increase corporate advertising by $1,000,000. The company estimates doing so would increase total unit sales to 2,200,000.
2. Decrease the price of cell phones to $70. The company estimates doing so would increase cell phone sales to 3,150,000 units and have no effect on the unit selling price of the other products.
Determine the effect of each proposal on budgeted profits for the coming year. Which alternative is preferred, and what is the relative financial benefit of that alternative?
Incremental benefit of choosing option one: $Answer
Incremental benefit of choosing option two: $Answer
Choose option number Answer
resulting in additional profits of $Answer
over the other option.
NOTE: ANSWERS OPTION OF CHOOSING OPTION (1) IS 1,400,000 AND OPTION (2) 14,250,000. RESULTING IN ADDTIONAL PROFIT OF IS $12,850,000. NEED STEP BY STEP SOLUTIONS PLEASE!
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