Problem 4-51 (Algo) Special Orders (LO 4-1, 2) Miles Audio produces and sells car audio systems. They specialize in receivers and currently offer two models. The Growler is a high quality but affordable unit that the company produces for sale in auto parts and electronics stores. The Maniac is sold almost solely to individuals and high-end car stereo installers. The Maniac is only produced to order. In other words, the Maniac is not kept in inventory and is only produced when a customer orders one. Based on estimates of next quarter's business, the financial staff at Miles has produces the following forecasted income statement. Number of systems Growler Maniac 2,400 450 Total 2,850 $ $ Sales revenue 504,000 410,625 914,625) $ $ Materials 96,000 70,200 166,200 Labor 115,200 108,000 223,200 Materials inspection Factory lease 57,600 42,120 99,720 33,160 17,860 51,020 Utilities 14,700 7.920 22,620 Miscellaneous factory costs 27,320 14,720 42,040 Sales and administration 142,140 $ Total costs 746,940 $ Operating profit 167,685 Firm orders have already been placed with Miles for the 450 Maniac systems reflected in the forecasted quarterly income statement. Materials inspection varies with material cost. The labor wage rate at Miles (excluding variable overhead) is $32 per hour. The factory lease, utilities, and miscellaneous factory costs are allocated to the product lines based on the amount of floor space occupied. Sales and administration costs are not allocated to the two product lines.
Problem 4-51 (Algo) Special Orders (LO 4-1, 2) Miles Audio produces and sells car audio systems. They specialize in receivers and currently offer two models. The Growler is a high quality but affordable unit that the company produces for sale in auto parts and electronics stores. The Maniac is sold almost solely to individuals and high-end car stereo installers. The Maniac is only produced to order. In other words, the Maniac is not kept in inventory and is only produced when a customer orders one. Based on estimates of next quarter's business, the financial staff at Miles has produces the following forecasted income statement. Number of systems Growler Maniac 2,400 450 Total 2,850 $ $ Sales revenue 504,000 410,625 914,625) $ $ Materials 96,000 70,200 166,200 Labor 115,200 108,000 223,200 Materials inspection Factory lease 57,600 42,120 99,720 33,160 17,860 51,020 Utilities 14,700 7.920 22,620 Miscellaneous factory costs 27,320 14,720 42,040 Sales and administration 142,140 $ Total costs 746,940 $ Operating profit 167,685 Firm orders have already been placed with Miles for the 450 Maniac systems reflected in the forecasted quarterly income statement. Materials inspection varies with material cost. The labor wage rate at Miles (excluding variable overhead) is $32 per hour. The factory lease, utilities, and miscellaneous factory costs are allocated to the product lines based on the amount of floor space occupied. Sales and administration costs are not allocated to the two product lines.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 4-51 (Algo) Special Orders (LO 4-1, 2)
Miles Audio produces and sells car audio systems. They specialize in receivers and currently offer
two models. The Growler is a high quality but affordable unit that the company produces for sale in
auto parts and electronics stores. The Maniac is sold almost solely to individuals and high-end car
stereo installers. The Maniac is only produced to order. In other words, the Maniac is not kept in
inventory and is only produced when a customer orders one. Based on estimates of next quarter's
business, the financial staff at Miles has produces the following forecasted income statement.
Number of systems
Growler Maniac
2,400
450
Total
2,850
$
$
Sales revenue
504,000 410,625 914,625)
$
$
Materials
96,000 70,200 166,200
Labor
115,200 108,000 223,200
Materials inspection
Factory lease
57,600
42,120 99,720
33,160 17,860 51,020
Utilities
14,700
7.920
22,620
Miscellaneous factory costs 27,320
14,720
42,040
Sales and administration
142,140
$
Total costs
746,940
$
Operating profit
167,685
Firm orders have already been placed with Miles for the 450 Maniac systems reflected in the
forecasted quarterly income statement. Materials inspection varies with material cost. The labor
wage rate at Miles (excluding variable overhead) is $32 per hour. The factory lease, utilities, and
miscellaneous factory costs are allocated to the product lines based on the amount of floor space
occupied. Sales and administration costs are not allocated to the two product lines.
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