Question

I'm confused on how to do this problem, especially when calculating the rent and labor rates.

Chapter 1 Cost Accounting: Information for Decision Making 1-54. Cost Data for Managerial Purposes-Finding Unknowns (LO 1-3) Miller Cereals is a small milling company als is a small milling company that makes a single brand of cereal. Recently, a business school intern recon intern recommended that the company introduce second cereal in order to diversify the Product portfolio." Currently, the company shows an onerating profit that is 20 percent of sales. With the single product other costs were twice the cost of rent. The intern estimated that the incremental profit of the new cereal would only be 25 percent of the incremental revenue, but it would still add to total profit On his last day, the intern told Miller's marketing manager that his analysis was on the company laptop in a spreadsheet with a file name, New Product.xlsx. The intern then left for a 12-month walkabout in the outback of Australia and cannot be reached When the marketing mana per opened the file it was corrupted and could not be opened. She then found an early (incomplete) copy on the company's buckup server. The incomplete spread- sheet is shown as follows. The marketing manager then called a cost management accountant in the controller's office and asked for help in reconstructing the analysis. Required As the management accountant, fill in the blank cells. MILLER CEREALS Projected Income Statement for One Year Status Quo: Single Product % Increase (Decrease) 40% Alternative: Two Products $ (b) Difference $60,000 Sales revenue $ (a) 40,000 60,000 60,000 (k) (m) 20% 50% Costs Material. Labor Rent.... Depreciation........... Utilities...................... Other... Total costs. Operating profit............ (9) 8,000 (n) 8,000 5,000 fo) (P) 1,000 iv) (h) $ (d)

I tried looking at similar questions, but they didn't explain how they got the decimals.

Answer 1

We need to solve the blanks in the order i.e. firstly solve a, then b and then c, then d and so on.

H difference status % increase alternative: quo: single (decrease) two products product 150,000 40% 210,000 60,000 sales revenue costs material labor rent depreciation utilities other total costs operating profit 20,000 10.000 3,000 40,000 50,000 6,000 8,000 4,000 12.000 120,000 30,000 50% 20% 50% 0% 25% 60,000 60,000 9,000 8,000 5,000 36,500 178,500 31,500 1,000 24,500 58,500 1,500 5%

For formulas and calculations, refer to the image below -

X fx status quo: single product% increase (decrease) | alternative: two products difference 0.4 =C3+F3 60000 =(E5-C5)/C5 60000 0.2 60000 =E5-C5 =E6-C6 =E7-C7 sales revenue =F3/D3 costs material 40000 labor =E6/(1+06) rent =(C11-C9-C8-C6-C5)*1/3 depreciation 8000 utilities =E9-F9 other =C7*2 total costs =C3-C12 operating profit =C3*20% 0.5 =(E8-C8)/C8 =(E9-C9)/C9 =C7*(1+07) 8000 5000 =E11-SUM(E5:E9) =C11+F11 =C12+F12 1000 =F11-SUM(F5:F9) =F3-F12 =F3*2.5% =F12/C12

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