Wizard Corporation has analyzed their customer and order handling data for the past year and has determined the following costs:Order processing cost per order$7Additional costs if the order must be expedited (rushed) $9.50Customer technical support calls (per call)$12Relationship management costs (per customer per year) $1200In addition to these costs, product costs amount to 75% of Sales.In the prior year, Wizard had the following experience with one of its customers, Chester Company:SalesNumber of orders$16,000160Percent of orders marked rush 70%Calls to technical support80Calculate the profitability of the Chester Company account.

To calculate the profitability of the Chester Company account, we will determine the total costs…

Answered: Wizard Corporation has analyzed their…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...

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Evans Company had total sales of 3,000,000 for fiscal 20x5. The costs of quality-related activities are given below. Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? 2. Prepare a bar graph and pie chart that illustrate each categorys contribution to total quality costs. Comment on the significance of the distribution. 3. What if, five years from now, quality costs are 7.5 percent of sales, with control costs being 65 percent of the total quality costs? What would your conclusion be?
Using the information in the previous exercises about Marleys Manufacturing, determine the operating income for department B, assuming department A sold department B 1,000 units during the month and department A reduces the selling price to the market price.
Wizard Corporation has analyzed their customer and order handling data for the past year and has determined the following costs: Order processing cost per order $7 Additional costs if order must be expedited (rushed) $10.00 Customer technical support calls (per call) $12 Relationship management costs (per customer per year) $1200 In addition to these costs, product costs amount to 75% of Sales. In the prior year, Wizard had the following experience with one of its customers, Chester Company: Sales $15,500 Number of orders 160 Percent of orders marked rush 70% Calls to technical support 80 Required: Calculate the profitability of the Chester Company account.
Fence Industries is preparing its annual profit plan. As part of its analysis of the profitability of its customers, management estimates that the $15,000 for sales support should be assigned to the individual customers from the information given as follows: Multiple Choice Units purchased Purchase orders (annually) What is the amount of the sales support costs that should be allocated to Customer B, assuming Fence uses purchases orders to compute activity-based costs? $3,000 $6,000 $9,000 Customer A 200,000 $12,000 Customer B 300,000 32 8
Corazon Manufacturing Company has a purchasing department staffed by five purchasingagents. Each agent is paid $28,000 per year and is able to process 4,000 purchase orders. Lastyear, 17,800 purchase orders were processed by the five agents.Required:1. Calculate the activity rate per purchase order.2. Calculate, in terms of purchase orders, the:a. total activity availabilityb. unused capacity3. Calculate the dollar cost of:a. total activity availabilityb. unused capacity4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for $14,000? How many pur-chase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
You are doing some financial analysis research for your work and managed to get (incomplete) data. You will use this data to deduce the required information. You can assume 365 days in a year. a) Alpha Co. reported a cost of goods sold of $64,380.00 and an accounts payable balance of $16,700.00 last year. Compute the average time taken to pay suppliers. Discuss the significance of a longdays’ costs in payables for the firm. b) Bravo Ltd. equity multiplier is 1.93, its total asset turnover is 2.65, and its profit margin is 4.20 percent. Compute the Return on Equity (ROE). Explain the impact on ROE, should the total asset turnover decline next year. c) Charlie Inc. has a profit margin of 7.90 percent, a total asset turnover of 1.54, and a Return on Equity (ROE) of 13.47 percent. Solve for the debt-equity ratio. d) Delta GMBH’s ROE is 8.9 percent. Sales are $2,956,000.00. Total debt ratio is 0.3743. Total debt is $964,000.00. Determine the return on assets (ROA).
Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Caldwell buys 100,900 units at an average unit cost of $19 and sells them at an average unit price of $29. The firm also has fixed operating costs of $250,900 for the year. Caldwell's customers are demanding a 19% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 14% discount. Required: Caldwell has estimated that it can reduce the number of purchase orders to 770 and can decrease the cost of shipment by $12 with minor changes in its operations. Any further cost savings must come from reengineering the warehousing processes. What is the maximum cost (i.e., target cost) for warehousing if the firm desires to earn the same amount of profit next year?
Nerrod Company sells its products at $840 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: Activity Cost Driver and Rate Sales calls $ 570 per visit Order processing $ 185 per order Deliveries $ 80 per order + $0.50 per mile Sales returns $ 95 per return and $6.4 restocking per unit returned Nerrod Company has gathered the following data pertaining to activities it performed for two of its customers: XBT NINTO Number of orders 27 2 Number of parts per order 670 2,170 Sales returns: Number of returns 4 10 Number of units returned 40 50 Number of sales calls 14 10 Miles per delivery 10 20 Shipping terms FOB, Factory FOB, Destination What is Nerrod's total customer unit-level cost applicable to XBT as a customer?
Smith Company sells its products at $620 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: Activity Sales calls Order processing Deliveries Sales returns Cost Driver and Rate $460 per visit $ 130 per order $80 per order + $0.50 per mile $ 90 per return and $3 restocking per unit returned Smith Company has gathered the following data pertaining to activities it performed for two of its customers: Number of orders Number of parts per order Sales returns: Number of returns. Number of units returned (per return) Number of sales calls Miles per delivery Shipping terms What is Smith's total customer batch-level cost applicable to Ninto? XBT 16 560 4 40 12 10 FOB, Factory NINTO 2 2,060 10 50 10 20 FOB, Destination
Smith Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: Activity Sales calls Cost Driver and Rate $ 400 per visit Order processing Deliveries $ 100 per order Sales returns $ 50 per order + $0.50 per mile $ 60 per return and $3 restocking per unit returned Smith Company has gathered the following data pertaining to activities it performed for two of its customers: Number of orders Number of parts per order Sales returns: Number of returns Number of units returned (per return) XBT 10 500 NINTO 2 2,000 4 10 40 50 6 10 10 20 FOB, Factory FOB, Destination Number of sales calls Miles per delivery Shipping terms What is Smith's total sales-sustaining cost applicable to XBT as a customer? Multiple Choice $4,120. $920. ○ $6,300. ○ $6,420. о $0.
Please post solution as same format in question. Thanks.
Metlock sells books, movies, and magazines to a wide customer base. In a typical month, about 40% of its sales volume is from books, 40% from movies, and 20% from magazines. The selling price and cost information for each of these product categories is as follows. Selling price Variable cost/unit (a) (b) ✓ Your answer is correct. In addition, Metlock incurs facility and administrative costs that average $28,080 per month. Weighted-average contribution margin eTextbook and Media Books $9 3 Find the weighted-average contribution margin per unit for this company. (Round answer to 2 decimal places, e.g. 15.25.) ✓ Your answer is correct. Books (c) Movies Magazines eTextbook and Media Movies $14 * Your answer is incorrect. 9 Determine how many units from each product category Metlock must sell to break even. (Round answers to O decimals, e.g. 15.) Books Movies Magazines Magazines 2160 units 2160 units 1080 units $5 1 1200 units Metlock normally sells 3,000 books each month. Given the current…

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