Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 4, Problem 3TIF
Communication
The controller of New Wave Sounds Inc. prepared the following product profitability report for management, using activity-based costing methods for allocating both the factory
In addition, the controller interviewed the vice president of marketing, who provided the following insight into the company’s three products:
- The home theater speakers are an older product that is highly recognized in the marketplace.
- The wireless speakers are a new product that was just recently launched.
- The wireless headphones are a new technology that has no competition in the marketplace, and it is hoped that they will become an important future addition to the company’s product portfolio. Initial indications are that the product is well received by customers.
The controller believes that the
Based on the information provided:
- 1. Calculate the ratio of gross profit to sales and the ratio of operating income to sales for each product.
- 2. Write a brief (one-page) memo using the product profitability report and the calculations in (a) to make recommendations to management with respect to strategies for the three products.
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The controller of New Wave Sounds Inc. prepared the following product profitability report for
management, using activity-based costing methods for allocating both the factory overhead and
the marketing expenses. As such, the controller has confidence in the accuracy of this report.
Home
Theater
Wireless
Wireless
Speakers
Speakers
Headphones
Total
$ 1,500,000
(1,050,000)
$ 450,000
(600,000)
$ (150,000)
$ 900,000
(810,000)
$ 90,000
(72,000)
$ 18,000
$ 3,600,000
(2,580,000)
$ 1,020,000
(792,000)
$ 228,000
Sales
$1,200,000
Cost of goods sold
Gross profit
(720,000)
$ 480,000
(120,000)
$ 360,000
Marketing expenses
Operating income
In addition, the controller interviewed the vice president of marketing, who provided the
following insight into the company's three products:
The home theater speakers are an older product that is highly recognized in the marketplace.
- The wireless speakers are a new product that was just recently launched.
- The wireless headphones are a new technology that has…
Company XYZ Manufacturer Limited is involved in the production of antiseptic products. Recently Company has started manufacturing of Sanitizers due to overwhelming demand of this product in the market. As company has already expertise in production of disinfectants therefore this new product will increase the product line of business. You are required to describe whether this company is involved in Job order costing or Process costing method to calculate product cost also differentiate between these two types.
Company’s CEO has directed the financial manger to calculate the total cost of production for sanitizers during the year 2020. For this purpose the accountants have recorded and prepared the following cost data related to production of five thousand sanitizers for year 2020 in company’s accounting record under the title of Job “A111”
Indirect Material
Rs. 38,000
Other Costs incurred:
Rs.
Indirect Labor
78,000
Purchases of Raw Material (Both Direct and Indirect)…
Match each of the following cost items with the value chain business function where you would expect the cost to be incurred:
Cost Item
1. Labor time to repair products under warranty
2. Radio commercials
3. Labor costs of delivering customer orders
4. Testing of competitor's product
5. Direct manufacturing labor costs
6. Development of order tracking system for online sales
7. Design cost of new product brochures
8. Hours spent designing childproof bottles
9. Training costs for representatives to staff the customer call center
10. Installation of robotics equipment in manufacturing plant
Business Function
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - Why would management be concerned about the...Ch. 4 - Why would a manufacturing company with multiple...Ch. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - How does activity-based costing differ from the...Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Under what circumstances might the activity-based...Ch. 4 - Prob. 9DQCh. 4 - Prob. 10DQ
Ch. 4 - Single plantwide factory overhead rate The total...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based costing: factory overhead costs The...Ch. 4 - Activity-based costing: selling and administrative...Ch. 4 - Activity-based costing for a service business...Ch. 4 - Kennedy Appliance Inc.s Machining Department...Ch. 4 - Bach Instruments Inc. makes three musical...Ch. 4 - Scrumptious Snacks Inc. manufactures three types...Ch. 4 - Isaac Engines Inc. produces three productspistons,...Ch. 4 - Handy Leather, Inc., produces three sizes of...Ch. 4 - Eclipse Motor Company manufactures two types of...Ch. 4 - The management of Nova Industries Inc....Ch. 4 - Comfort Foods Inc. uses activity-based costing to...Ch. 4 - Nozama.com Inc. sells consumer electronics over...Ch. 4 - Hercules Inc. manufactures elliptical exercise...Ch. 4 - Lonsdale Inc. manufactures entry and dining room...Ch. 4 - Activity cost pools, activity rates, and product...Ch. 4 - Handbrain Inc. is considering a change to...Ch. 4 - Prob. 14ECh. 4 - Activity-based costing and product cost distortion...Ch. 4 - Prob. 16ECh. 4 - Evaluating selling and administrative cost...Ch. 4 - Prob. 18ECh. 4 - Prob. 19ECh. 4 - Activity-based costing for a service company...Ch. 4 - Bounce Back Insurance Company carries three major...Ch. 4 - Gwinnett County Chrome Company manufactures three...Ch. 4 - The management of Gwinnett County Chrome Company,...Ch. 4 - Activity-based and department rate product costing...Ch. 4 - Activity-based product costing Mello Manufacturing...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Single plantwide factory overhead rate Spotted Cow...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based department rate product costing and...Ch. 4 - Activity-based product costing Sweet Sugar Company...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Life Force Fitness, Inc., assembles and sells...Ch. 4 - Prob. 2MADCh. 4 - Prob. 3MADCh. 4 - Production run size and activity improvement...Ch. 4 - Prob. 5MADCh. 4 - Ethics in Action The controller of Tri Con Global...Ch. 4 - Communication The controller of New Wave Sounds...Ch. 4 - Pelder Products Company manufactures two types of...Ch. 4 - The Chocolate Baker specializes in chocolate baked...Ch. 4 - Young Company is beginning operations and is...Ch. 4 - Cynthia Rogers, the cost accountant for Sanford...
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