ABC and CVP Analysis: Multiple Products
Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:
Rose | Violet | |
---|---|---|
Expected sales (in cases) | 58,000 | 11,600 |
Selling price per case | $102 | $83 |
Direct labor hours | 38,000 | 6,050 |
Machine hours | 10,050 | 3,150 |
Receiving orders | 49 | 26 |
Packing orders | 101 | 49 |
Material cost per case | $51 | $45 |
Direct labor cost per case | $8 | $8 |
The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours.
Fixed | Variable | ||
---|---|---|---|
Direct labor benefits | $ — | $211,440 | |
Machine costs | 195,500* | 273,110 | |
Receiving department | 217,000 | — | |
Packing department | 140,500 | — | |
Total costs | $553,000 | $484,550 |
* All depreciation
Required:
1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number.
Break-even cases of Rose | ? |
Break-even cases of Violet | ? |
2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number.
Break-even cases of Rose | ? |
Break-even cases of Violet | ? |
1.
Break-even cases of Rose | 5883 cases |
Break-even cases of Violet | 13166 cases |
BEP= Fixed Cost / (Selling price per case- variable cost per case)
2.
Break-even cases of Rose |
9117 cases |
Break-even cases of Violet | 14319 cases |
BEP = Fixed Cost + (Direct Labour Hour * Direct Labor cost per case ) / (Selling price per case- variable cost per case)
ABC and CVP Analysis: Multiple Products Good Scent, Inc., produces two colognes: Rose and Violet. Of...
ABC and CVP Analysis: Multiple Products Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Rose Violet Expected sales (in cases) 54,500 10,900 Selling price per case $98 $83 Direct labor hours 33,550 5,800 Machine hours 10,050 3,100 Receiving orders 53 24 Packing orders 97 48 Material cost per case $50 $43 Direct labor cost per case $11 $9 The company uses a conventional costing system and...
ABC and CVP Analysis: Multiple Products Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Rose Violet Expected sales (in cases) 51,000 10,200 Selling price per case $103 $81 Direct labor hours 32,250 5,500 Machine hours 10,350 3,150 Receiving orders 50 27 Packing orders 102 55 Material cost per case $50 $45 Direct labor cost per case $9 $6 The company uses a conventional costing system and...
ABC and CVP Analysis: Multiple Products Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Rose Violet Expected sales (in cases) 49,500 9,900 Selling price per case $99 $80 Direct labor hours 33,700 6,000 Machine hours 9,050 3,500 Receiving orders 50 24 Packing orders 103 51 Material cost per case $51 $41 Direct labor cost per case $10 $5 The company uses a conventional costing system and...
Good Scent, Inc., produces two colognes: Rose and violet. Of the two, Rose is more popular. Data concerning the two products follow Violet Rose Expected sales (in cases) 10,900 54,500 Selling price per case $100 $80 33,450 Direct labor hours 5,800 Machine hours 2,850 10,500 Receiving ord ers 48 22 Packing orders 105 54 Material cost per case $53 $45 Direct labor cost per case $10 $6 The company uses a conventional costing system and assigns overhead costs to products...
CVP with Activity-Based Costing and Multiple Products Busy-Bee Baking Company produces a variety of breads. The plant manager would like to expand production into sweet rolls as well. The average price of a loaf of bread is $1. Anticipated price for a package of sweet rolls is $1.50. Costs for the new level of production are as follows: Cost Driver Unit Variable Cost Level of Cost Driver Loaf of bread $0.65 — Package of sweet rolls $0.93 — Setups $300 ...
Nutterco, Inc., produces two types of nut butter: peanut butter and cashew butter. Of the two, peanut butter is the more popular. Cashew butter is a specialty line using smaller jars and fewer jars per case. Data concerning the two products follow: Peanut Butter Cashew Butter Unused Capacitya units of Purchaseb Expected sales (in cases) 50,000 10,000 - - Selling price per case $100 $80 - - Direct labor hours 40,000 10,000 - As needed Receiving orders 500 250 250...
Keep-or-Drop: Traditional Versus Activity-Based Analysis Nutterco, Inc., produces two types of nut butter: peanut butter and cashew butter. Of the two, peanut butter is the more popular. Cashew butter is a specialty line using smaller jars and fewer jars per case. Data concerning the two products follow: Peanut Butter Cashew Butter Unused Capacitya units of Purchaseb Expected sales (in cases) 50,000 10,000 - - Selling price per case $100 $80 - - Direct labor hours 40,000 10,000 - As needed...
CVP Analysis of Multiple Products Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Steinberg expects to sell 100,000 regular models and 20,000 deluxe models. A segmented income statement for the two products is as follows: Regular Model Deluxe Model Total Sales $16,000,000 $13,400,000 $29,400,000 Less: Variable costs 9,600,000 8,040,000 17,640,000 Contribution...
CVP Analysis of Multiple Products Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Steinberg expects to sell 100,000 regular models and 20,000 deluxe models. A segmented income statement for the two products is as follows: Regular Model Deluxe Model Total Sales $15,000,000 $13,600,000 $28,600,000 Less: Variable costs 9,000,000 8,160,000 17,160,000 Contribution...
CVP Analysis of Multiple Products Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Steinberg expects to sell 100,000 regular models and 20,000 deluxe models. A segmented income statement for the two products is as follows: Total Regular Model $16,000,000 9,600,000 Deluxe Model $13,400,000 Sales $29,400,000 Less: Variable costs &040.000 17,640,000 Contribution...