Value and Nonvalue-Added Costs Waterfun Technology produces engines for recreational boats. Because of competitive pressures, the company was makong en effort to reduce costs. A part of this effort, management implemented an activity-based management system and began focusing its attention an proceses and activmes Receiving was among the processes (activities) that were carefully studied. The study revealed that the number of receiving onders was a good driver tur receiving costs. During the last year, the company incurred fixed receiving costs of $630,000 (salaries of 10 empleyees). These fixed costa provide capacity of processing 72,000 recelving orders (7,200 per employee at practical capacity). Management decided that the efficient level for recelving should use 36,000 receiving arders. Required: 1. Explain why receiving would be viewed as a value-added activity. Which of these are possible reasons that explain why the demand for receiving is more than the efficent level of 36,000 orders 2. Break the cost of receiving into its value-added and nonvalue-added components. Value-added costs Nonvalue added costs

Value and Nonvalue-Added Costs Waterfun Technology produces engines for recreational boats. Because of competitive pressures, the company was makong en effort to reduce costs. A part of this effort, management implemented an activity-based management system and began focusing its attention an proceses and activmes Receiving was among the processes (activities) that were carefully studied. The study revealed that the number of receiving onders was a good driver tur receiving costs. During the last year, the company incurred fixed receiving costs of $630,000 (salaries of 10 empleyees). These fixed costa provide capacity of processing 72,000 recelving orders (7,200 per employee at practical capacity). Management decided that the efficient level for recelving should use 36,000 receiving arders. Required: 1. Explain why receiving would be viewed as a value-added activity. Which of these are possible reasons that explain why the demand for receiving is more than the efficent level of 36,000 orders 2. Break the cost of receiving into its value-added and nonvalue-added components. Value-added costs Nonvalue added costs

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

As an analyst at Delta Air Lines, you are asked to help the operations staff. Operations has identified a new method of loading baggage that is expected to result in a 35 percent reduction in labor time but no changes in any other costs. The current labor cost to load bags is $3 per bag. Other costs are $2 per bag. Required: a-1. What differential costs should the operations staff consider for the decision to use the new method next year? a-2. What would be the cost savings per bag using it? b. How would management use the information in requirement (a) and any other appropriate information to proceed with the contemplated use of the new baggage loading method? What would be the cost savings per bag using it? Note: Round your answer to 2 decimal places. Cost savings per bag
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Activity-Based Management, Nonvalue-Added CostsDanna Martin, president of Mays Electronics, was concerned about the end-of-the year marketingreport that she had just received. According to Larry Savage, marketing manager, a price decreasefor the coming year was again needed to maintain the company’s annual sales volume of integratedcircuit boards (CBs). This would make a bad situation worse. The current selling price of $18 perunit was producing a $2-per-unit profit—half the customary $4-per-unit profit. Foreign competitors kept reducing their prices. To match the latest reduction would reduce the price from $18 to$14. This would put the price below the cost to produce and sell it. How could these firms sell forsuch a low price? Determined to find out if there were problems with the company’s operations,Danna decided to hire a consultant to evaluate the way in which the CBs were produced and sold.After two weeks, the consultant had identified the following activities and costs:Setting…
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Vikarmbhai
please do not provide solution in image format thank you!
Due to the increased intensity of competition, the company is contemplating the activitybased costing method to help understand and control its costs better. The following are the costing and operating details collected for the pilot testing purpose. Material Handling QA Total Documentation $750,000 $1,100,000 $1,850,000 Fork Lift Truck Depreciation $500,000 $250,000 $750,000 Palletizing $1,250,000 - $1,250,000 Inspection - $650,000 $650,000 Total $2,500,000 $2,000,000 $4,500,000 Number of process checklist forms 7 17 13 37 Fork Lift Truck Hours 15 35 25 75 Number of pallets 25 145 80 250 Number of inspection hours 400 1,100 1,000 2,500 Question 1. Compute the activity-based cost allocated to all products. Would you recommend for the change to ABC? Explain
Change in Contribution Margin Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sales price Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed manufacturing costs Operating income Head Pops Inc. Analysis Line Item Description Unit volume increase x Contribution margin per unit Increase in profitability Sun Sound Ear Bling Headphones Headphones $29.80 $46.50 (16.70) (26.00) $13.10 $20.50 (6.00) $7.10 (2.70) $4.40 Prepare an analysis indicating the increase or decrease in total profitability if 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for…
1. Compute the unit contribution margin for both models.
Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable number of customers. Data from the most recent period concerning these products appear below: Annual sales volume Unit selling price Variable expense per unit Contribution margin per unit Velcro 101,800 $ 1.65 $ 1.25 $ 0.40 Metal 203,600 $ 1.50 $ 0.70 $ 0.80 Nylon 407, 200 $ 0.85 $ 0.25 $ 0.60 Total fixed expenses are $407,200 per period. Of the total fixed expenses, $20,000 could be avoided if the Velcro product is dropped, $80,000 if the Metal product is dropped, and $60,000 if the Nylon product is dropped. The remaining fixed expenses of $247,200 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business. The company's managers would like to…
Oriole Company's actual results reveal that it was profitable in the sale of its star product: a high-end spot-cleaning vacuum for upholstery. But it was not nearly as profitable as management had hoped. Oriole's actual income statement and master budget income statement are as follows. In order to keep the focus on product costs, SG&A costs were omitted. Units sold Revenues Variable costs DM DL Variable-MOH Contribution margin Fixed-MOH Operating income DM DL Input Variable-MOH Fixed-MOHI (a) Here are the company's standard cost cards for each product cost. Units sold Revenues Variable costs DM DL Variable-MOH Actual Results 10,000 $1,670,000 Contribution margin Fixed-MOH 560,500 Operating income 216,000 130,500 763,000 Your answer is correct. 306,000 Quantity Standards 3.0 yards $457,000 $ 1.6 hours Prepare a flexible budget for Oriole Company so management can evaluate the company's actual performance using a more appropriate benchmark. 1.6 hours 1.6 hours Flexible Budget Master…
The Quality Athletics Company produces a wide variety of outdoor sports equipment. Its newest division, Golf Technology, manufactures and sells a single product: AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers' shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf TechnoloTotal annual fixed costs $30,000,000 Variable cost per AccuDriver $440 Number of AccuDrivers sold each year 155,000 Average operating assets invested in the division $ 50,000,0001. Compute Golf Technology's ROI if the selling price of AccuDrivers is $ 740 per club. 2. If management requires an ROI of at least 20% from the division, what is the minimum selling price that the Golf Technology Division should charge per AccuDriver club? 3. Assume that Quality Athletics judges the performance of its investment centres on the basis of RI rather than ROI. What is the minimum selling price that Golf…