Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 11, Problem 11.28E
Selection of most profitable product. Body Image, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows:
The weight-lifting craze suggests that Body Image can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same production departments. Which product should the company produce? Briefly explain your answer.
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Selection of most profitable product. Body Image, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows:
Fitness Gym, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows:
E (Click the icon to view the data.)
The weight-lifting craze suggests that Fitness Gym can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same
production departments.
Read the requirements.
Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin per machine hour for each machine. (Reduce the fixed manufacturing
overhead to the lowest possible ratio of machine hours in order to calculate the contribution margin per machine hour. Example: 8:4 would be 2:1. Enter the amounts to the nearest cent.)
Model 9
Model 14
Data Table
Contribution margin per unit
A
В
1
Per Unit
Contribution margin per machine hour
Model 9
Model 14
Fitness Gym, Inc. should produce:
3 Selling price
$
125.00 $
90.00
A. Both Model 9 and Model 14…
+
Aquatic Line Company (ALC) manufactures a variety of strong and durable ropes. The company
manufactures all their products in a large factory located near Nephi, Utah. All the types of ropes the
company manufactures can be produced using the same machines in the factory. Workers can adjust
the machines to produce the specific type of rope needed for production. ALC is reviewing the
profitability of its products to understand if changes need to be made to its product portfolio. Product
N3 is a heavy, durable rope used to secure ships when they dock. The following is the product-line
contribution margin statement for the most recent year.
Revenue
$
1,150,000
Variable Costs
Direct Material
$
600,000
Direct Labor
$
100,000
Variable Overhead
$ 150,000
Shipping
$
85,000
Contribution Margin
$
215,000
Fixed Costs
Rent
$
50,000
Indirect Labor
$
115,000
Marketing
$
56,000
Operating Income
$
(6,000)
For the most recent year, ALC sold 10,000 yards of N3. The sales price of N3 is $115 per yard.…
Chapter 11 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 11 - Prob. 11.1QCh. 11 - Define relevant costs. Why are historical costs...Ch. 11 - All future costs are relevant. Do you agree? Why?Ch. 11 - Distinguish between quantitative and qualitative...Ch. 11 - Describe two potential problems that should be...Ch. 11 - Variable costs are always relevant, and fixed...Ch. 11 - A component part should be purchased whenever the...Ch. 11 - Prob. 11.8QCh. 11 - Managers should always buy inventory in quantities...Ch. 11 - Management should always maximize sales of the...
Ch. 11 - Prob. 11.11QCh. 11 - Cost written off as depreciation on equipment...Ch. 11 - Managers will always choose the alternative that...Ch. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Qualitative and quantitative factors. Which of the...Ch. 11 - Special order, opportunity cost. Chade Corp. is...Ch. 11 - Prob. 11.18MCQCh. 11 - Keep or drop a business segment. Lees Corp. is...Ch. 11 - Relevant costs. Ace Cleaning Service is...Ch. 11 - Disposal of assets. Answer the following...Ch. 11 - Relevant and irrelevant costs. Answer the...Ch. 11 - Multiple choice. (CPA) Choose the best answer. 1....Ch. 11 - Special order, activity-based costing. (CMA,...Ch. 11 - Make versus buy, activity-based costing. The...Ch. 11 - Inventory decision, opportunity costs. Best Trim,...Ch. 11 - Relevant costs, contribution margin, product...Ch. 11 - Selection of most profitable product. Body Image,...Ch. 11 - Theory of constraints, throughput margin, relevant...Ch. 11 - Closing and opening stores. Sanchez Corporation...Ch. 11 - Prob. 11.31ECh. 11 - Relevance of equipment costs. Janets Bakery is...Ch. 11 - Equipment upgrade versus replacement. (A. Spero,...Ch. 11 - Special order, short-run pricing. Diamond...Ch. 11 - Short-run pricing, capacity constraints. Fashion...Ch. 11 - International outsourcing. Riverside Clippers Corp...Ch. 11 - Relevant costs, opportunity costs. Gavin Martin,...Ch. 11 - Opportunity costs and relevant costs. Jason Wu...Ch. 11 - Opportunity costs. (H. Schaefer, adapted) The Wild...Ch. 11 - Make or buy, unknown level of volume. (A....Ch. 11 - Make versus buy, activity-based costing,...Ch. 11 - Prob. 11.42PCh. 11 - Product mix, special order. (N. Melumad, adapted)...Ch. 11 - Theory of constraints, throughput margin, and...Ch. 11 - Theory of constraints, contribution margin,...Ch. 11 - Closing down divisions. Ainsley Corporation has...Ch. 11 - Dropping a product line, selling more tours....Ch. 11 - Prob. 11.48PCh. 11 - Dropping a customer, activity-based costing,...Ch. 11 - Equipment replacement decisions and performance...
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