Current Attempt in Progress Pharoah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $4,900 from sales $200,000, variable costs $175,000, and fixed costs $29,900. If the Big Bart line is eliminated, $19,400 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sales Variable costs Contribution margin Fixed costs Net Income/(Loss) $ Continue The Big Bart product line should be eTextbook and Media Save for Later Eliminate Net Income Increase (Decrease) $ $ $ Attempts: 0 of 3 used Submit Answer

Current Attempt in Progress Pharoah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $4,900 from sales $200,000, variable costs $175,000, and fixed costs $29,900. If the Big Bart line is eliminated, $19,400 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sales Variable costs Contribution margin Fixed costs Net Income/(Loss) $ Continue The Big Bart product line should be eTextbook and Media Save for Later Eliminate Net Income Increase (Decrease) $ $ $ Attempts: 0 of 3 used Submit Answer

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13P: Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income...

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Current Attempt in Progress Sandhill, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $3,500 from sales $201,000, variable costs $174,000, and fixed costs $30,500. If the Big Bart line is eliminated, $19,400 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number eg. 45 or parentheses e.g. (45).) Sales Variable costs Contribution margin Fixed costs Net Income /(Loss) Continue The Big Bart product line should be $ Eliminate $ $ Net Income Increase (Decrease)
Pet Hotel, Inc. operates three luxury pet boarding facilities and expects the following results for the coming year. {picture} Answer each of the following questions independently. 1. Fixed costs are all allocated and unavoidable. What will happen to profit if Pet Hotel discontinues operations at Pet Spa? 2. Suppose now that $25,000 of the fixed costs shown for Pet Spa is avoidable. What will happen to total profits if Pet Hotel discontinues operations at Pet Spa?
Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $10,000 from sales $200,000, variable costs $180,000, and fi xed costs $30,000. If the Big Bart line is eliminated, $20,000 of fi xed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated.
Shamrock Inc. manufactures golf clubs in three models. For the year, the Beca line has a net loss of $5,700 from sales of $234,000, variable costs of $210,600, and fixed costs of $29,100. If the Beca line is eliminated, $16,500 of fixed costs will remain. Prepare an analysis showing whether the Beca line should be eliminated. (If an amount reduces the net income then enter with a negative sign preceding the number eg. -15,000 or parenthesis, e.g. (15,000).) Continue Eliminate Increase (Decrease)
Sheridan Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $480,000. variable expenses of $363,000, and fixed expenses of $144,000. Therefore, the gloves and mittens line had a net loss of $27,000. If Sheridan eliminates the line, $36,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45))
Lisa Inc. manufactures golf clubs in three models. For the year, the Mart line has a net loss of $10,000 from sales of $200,000, variable costs of $180,000, and fixed costs of $30,000. If the Mart line is eliminated, $20,000 of fixed costs will remain. Which of the following is correct? The Mart line should not be eliminated because the amount of contribution margin given up is not completely offset by the savings in fixed costs The Mart line should be eliminated because the amount of contribution margin given up is completely offset by the savings in fixed costs The Mart line should be eliminated because the amount of contribution margin given up is partially offset by the savings in fixed costs The Mart line should not be eliminated because the amount of contribution margin given up is more than the savings in fixed costs
The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is $60,000. The variable cost of recapping a tire is $9.The company charges $25 to recap a tire. If the Retread Tire Company changes its pricing for recapping a tire from $25 to $31, what effect will the change have on the breakevenvolume?
Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)
Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas City, and the other in Tulsa. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for 1,620. Sales volume averages 20,000 units per year in each plant. Recently, the Kansas City plant reduced the price of the tilt model to 1,440. Discussion with the Kansas City manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called non-value-added costs. The Kansas City manufacturing and selling costs for the tilt model were 1,260 per unit. The Kansas City manager offered to loan the Tulsa plant his cost accounting manager to help it achieve similar results. The Tulsa plant manager readily agreed, knowing that his plant must keep pacenot only with the Kansas City plant but also with competitors. A local competitor had also reduced its price on a similar model, and Tulsas marketing manager had indicated that the price must be matched or sales would drop dramatically. In fact, the marketing manager suggested that if the price were dropped to 1,404 by the end of the year, the plant could expand its share of the market by 20 percent. The plant manager agreed but insisted that the current profit per unit must be maintained. He also wants to know if the plant can at least match the 1,260 per-unit cost of the Kansas City plant and if the plant can achieve the cost reduction using the approach of the Kansas City plant. The plant controller and the Kansas City cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices. Required: 1. Calculate the target cost for expanding the Tulsa plants market share by 20 percent, assuming that the per-unit profitability is maintained as requested by the plant manager. 2. Calculate the non-value-added cost per unit. Assuming that non-value-added costs can be reduced to zero, can the Tulsa plant match the Kansas City per-unit cost? Can the target cost for expanding market share be achieved? What actions would you take if you were the plant manager? 3. Describe the role that benchmarking played in the effort of the Tulsa plant to protect and improve its competitive position.
Diamond Boot Factory normally sells its specialty boots for $24 a pair. An offer to buy 125 boots for $16 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $9, and special stitching will add another $3 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization.$fill in the blank 1 Income/Loss? Should Diamond Boot Factory accept or reject the special offer? Yes or No
Old People Racquets manufactures pickleball racquets in four different models. For the year, the Ancient People racquet line had a net loss of $40,000 from sales of $250,000, variable costs of $180,00 and fixed costs of $110,000. If the Ancient People line is eliminated, $30,000 of fixed costs will remain. Should the line be eliminated and why or why not? It should be kept because it has a positive contribution margin. It should be eliminated and save the company $10,000. It should be elimninated-ancient people should never play any type of ball regardless of the dollars. It should be kept and save the company $10,000.