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Richard is the

Richard is the

FINANCIAL ACCOUNTING
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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Use Excel to allocate the three support department costs to the three product lines using the reciprocal method. (Round answers to 2 decimal places, e.g. 15.25.) Costs $ 4-Wheelers 983222.65 $ Operating Units Watercraft 1286445.63 $ Snowmobiles 1885113.29 $ Total 41
Transcribed Image Text:Use Excel to allocate the three support department costs to the three product lines using the reciprocal method. (Round answers to 2 decimal places, e.g. 15.25.) Costs $ 4-Wheelers 983222.65 $ Operating Units Watercraft 1286445.63 $ Snowmobiles 1885113.29 $ Total 41
Richard is the operating manager of Sheridan, a company that manufactures three different types of all-terrain vehicles: four- wheelers, personal watercraft, and snowmobiles. Naturally, Richard has the opportunity to test all of these products for quality- control purposes. At the end of the year, Richard needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively. Sales Four-Wheelers IT hours $1,132.000 Costs Number of employees Maintenance hours Personal Watercraft $1,399,000 Payroll $94,000 2 100 150 Maintenance. IT $116,000 $248,000 3 200 Snowmobiles $1,988.000 40 4 150 220 Four-Wheelers Watercraft $843,000 $1,143,000 20 1,800 800 18 750 1.250 Snowmobiles $1,742,000 27 1,300 900
Transcribed Image Text:Richard is the operating manager of Sheridan, a company that manufactures three different types of all-terrain vehicles: four- wheelers, personal watercraft, and snowmobiles. Naturally, Richard has the opportunity to test all of these products for quality- control purposes. At the end of the year, Richard needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively. Sales Four-Wheelers IT hours $1,132.000 Costs Number of employees Maintenance hours Personal Watercraft $1,399,000 Payroll $94,000 2 100 150 Maintenance. IT $116,000 $248,000 3 200 Snowmobiles $1,988.000 40 4 150 220 Four-Wheelers Watercraft $843,000 $1,143,000 20 1,800 800 18 750 1.250 Snowmobiles $1,742,000 27 1,300 900
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