Current Attempt in ProgressVaughn is a manufacturer that specializes in three types of toy instruments: xylophones, electronic keyboards, and drum sets.Grandparents across the globe flock to stores so they can buy their kids' kids these especially noisy toys. Company managers areequally excited about their products and await the profit report for this year's performance. The following partial income statementwas released to all managers last week.SalesCost of goods soldGross marginOperating expensesOperating income(a)Use Excel to complete the following.Xylophone$505,000Operatingincome217,000Your answer is correct.Profitmarginpercentage288,0003Keyboard$896,000444,000Xylophone452,000112527Drums12$602,000339,000263,000The company has not previously allocated its operating expenses to the three product lines but wants to do so now. Managersbelieve operating expenses are incurred in a proportion similar to COGS for each product line. Allocate the operating expensesusing each product line's proportion of its own COGS to total COGS, then determine operating income and profit marginpercentage by product line. (Round proportion of total cost of goods sold and profit margin percentage to 2 decimal places, e.g. 15.25%.Round final answers to O decimal places, e.g. 5,125. Enter loss using either a negative sign preceding the number e.g.-5.145 or -45% orparentheses e.g. (5.145) or (45)%.)Total5$2,003,0001,000,0001,003,000808,170$194,830Keyboard$43Drums Your answer is partially correct.After reviewing the profit report, one product line manager was concerned by how the operating expenses were allocated. He feltthat a disproportionate amount was being directed at his product line and requested that the accounting team review theseexpenses. After doing so, the accounting team observed that while some operating activity usage follows the COGS trend, not alloperating activity usage does. The accountants incorporated this new information and prepared the following for product linemanagers.Operating Expense ActivitiesDesignEngineeringSellingGeneralAdministrativeTotal operating ExpensesNew profit marginpercentageCostDrums and Keyboard$63,000255,000180,270236,40073,5005808,170XylophoneXylophone2008007,9007Quantity of Cost DriverKeyboard1,100800 Design hours2,400 1,900 Engineering hours166.900 4,900 Direct labor hoursDrums12Based on this updated information, prepare new allocations and profit analysis by product line. Which product line manager(s)will likely prefer this new ABC version of profitability? (Round answers to 2 decimal places, eg. 15.25%.)Keyboard% of dollar salesNumber of employees36managers will ikely prefer new ABC version of profitability.Drums55

Lets understand the basics. Sometime operating expense can not be directly allocable to product so…

Vaughn is a manufacturer that specializes in three types of toy instruments: xylophones, electronic keyboards, and drum sets. Grandparents across the globe flock to stores so they can buy their kids' kids these especially noisy toys. Company managers are equally excited about their products and await the profit report for this year's performance. The following partial income statement was released to all managers last week. Sales Cost of goods sold Gross margin Operating expenses Operating income Xylophone $505,000 217,000 288,000 Keyboard $896,000 444,000 452,000 Drums Total $602,000 $2,003,000 339,000 263,000 1,000,000 1,003,000 808,170 $194.830

Vaughn is a manufacturer that specializes in three types of toy instruments: xylophones, electronic keyboards, and drum sets. Grandparents across the globe flock to stores so they can buy their kids' kids these especially noisy toys. Company managers are equally excited about their products and await the profit report for this year's performance. The following partial income statement was released to all managers last week. Sales Cost of goods sold Gross margin Operating expenses Operating income Xylophone $505,000 217,000 288,000 Keyboard $896,000 444,000 452,000 Drums Total $602,000 $2,003,000 339,000 263,000 1,000,000 1,003,000 808,170 $194.830

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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