a - 1 | Profit Margin | ||||
Chairs | 20% | ||||
Desks | 30% | ||||
a - 2 | Chairs | ||||
As Chairs gives less profit margin | |||||
b. | Estimated margin for desks - Year 2 | 24.7% | |||
Workings: | |||||
a - 1 | Chairs | Desks | |||
(i) | Sales Revenue | $ 11,56,800 | $ 27,69,000 | ||
Direct material | $ 6,00,000 | $ 9,60,000 | |||
Direct labor | $ 1,40,000 | $ 4,50,000 | |||
Overhead | $ 2,24,000 | $ 7,20,000 | |||
(ii) | Total cost | $ 9,64,000 | $ 21,30,000 | ||
(iii) = (i) - (ii) | Gross Profit | $ 1,92,800 | $ 6,39,000 | ||
(iii) / (ii) | Profit Margin | 20% | 30% | ||
Chairs | Desks | Total | |||
(i) | Direct labor | $ 1,40,000 | $ 4,50,000 | $ 5,90,000 | |
(ii) = (i) / $500000 | Weight | 24% | 76% | ||
(ii) X $800000 | Overhead | $ 2,24,000 | $ 7,20,000 | $ 9,44,000 | |
b. | Desks | ||||
(i) | Sales Revenue | $ 27,69,000 | |||
Direct material | $ 9,60,000 | ||||
Direct labor | $ 4,50,000 | ||||
Overhead | $ 8,10,000 | ||||
(ii) | Total cost | $ 22,20,000 | |||
(iii) = (i) - (ii) | Gross Profit | $ 5,49,000 | |||
(iii) / (ii) | Profit Margin | 24.7% |
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a...
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 20 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $645.000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor Chairs $1,046,500...
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 35 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $945,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Chairs Desks Sales revenue $ 1,302,600 $ 3,017,000...
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 20 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $800,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor Chairs $1,150,000...
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 30 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $915,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor Chairs $1,220,000...
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 35 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $882,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following: Chairs Desks Sales revenue $ 1,346,800 $ 2,469,600...
SANTOS Award: 2.50 points McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot eam a margin of at least 25 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $944,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following Sales revenue Direct materials...
Exercise 9-31 (Static) Reported Costs and Decisions (LO 9-1) McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 20 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $800,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the...
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 25 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $630,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. ChairsDesksSales revenue$1,106,400$2,033,200Direct materials586,000820,000Direct labor140,000310,000 Required:a-1. Based on the CFO's new policy, calculate...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 45,000 40,000 Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost per...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 0 49,000 Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expen Variable per unit Fixed (per month) Manufacturing costat Direct materials cost per unit Direct labor cost per...