Imagine you are a manager. Your company has an opportunity to venture out into a new market with a new product. However, your current resources are limited. In order to take the opportunity, you need to discontinue the production of one of your existing products. Your company’s accountant provided you with the following information to help you decide which product to discontinue. Product A Income 5,000,000 Expenses 4,800,000 Product B Income 3,500,000 Expenses 2,275,000 Product C Income 2,100,000 Expenses 630,000 A. Product A B. Product B C. Product C D. All them
Q: Peas and Carrots, LLC manufactures running shoes. The company produces two products: Forrest and…
A: Operating income is the amount of income earned by an entity after deducting the operating expenses…
Q: Sophia & More Company sells clothing, shoes and accessories at a city location near you.…
A: Incremental Analysis: Incremental analysis refers to the analysis of differential revenue that could…
Q: Top managers of Vermont Flooring are alarmed by their operating losses. They are considering…
A: A technique with the help of which the selection of one from various alternatives can be made is…
Q: Five-step decision-making process, service firm. Sizemore Landscaping is a firm that provides…
A:
Q: Answers for part d, e, f and g please. Benoit Manufacturing Company manufactures and sells parts…
A: The margin of safety is calculated as excess of current sales over break even sales.
Q: Top managers of Video Avenue are alarmed by their operating losses. They are considering dropping…
A: Video Avenue Differential Analysis for dropping DVD Product Line Expected Decrease in Revenues…
Q: Q. Calculate Zahner’s 2017 contribution margin percentage, breakeven revenue, and degree of…
A: The contribution margin percentage using sales agent of 42% is computed by dividing the difference…
Q: Directions: For each situation, select one option you think will help increase profit. Put the…
A: There are various means to attract the customer. Also the company takes various steps to decrease…
Q: Lantern Company is thinking of discontinuing product line F because it is reporting an operating…
A: Introduction:- Lantern company discontinuing product line F It is operating loss is $9,000…
Q: Problem Situation: MVM Corporation seeks to partner with another company by letting them use and…
A: Working Notes :- Particulars Amount Amount Price per customer 40,000 Our share 40% 40,000 x…
Q: our Corporation has received a request for a special order of 6,000 units of its product for a…
A: The special order can be considered if it comes under the manufacturing capacity of the business and…
Q: Star Destroyer Company operates on three different planets in the galaxy. They are receiving reports…
A: Preparation of Income statement helps the business entity in determining how much amount of gross…
Q: irections: What would you do under the following situations below.
A: In this question, there are 3 different cases in which we have to show what would we do in these…
Q: Refer to the information for Petoskey Company from Exercise 8-44. Assume that 20% of theAlanson…
A: Contribution margin is the excess of sales revenue over variable costs in the business. Operating…
Q: You are a business analyst who develop solutions to some farm business problems. One of the…
A: Assessing Costs: All ventures involve an estimation of the benefits and costs before they are chosen…
Q: I have attached the file. Please help me with the solution.
A: The direct material cost per unit is $4.72 which is higher than flexible budget of $4.50.The actual…
Q: Asma is a junior management accountant at Flower Cloth Ltd. Asma is given the task of compiling a…
A: Standards of ethical conducts can be defined as the standards that should be followed by the members…
Q: 1,300 1,050 Actual overhead cost incurred $
A: 1) Predetermine overhead rate per hour of services demanded = Estimated overhead cost / Estimated…
Q: TBE a discount of $5 per guest in exchange for allowing the caterer to advertise. Required…
A: The details of Variable cost and fixed costs are given. Required 1. Suppose 150 persons attend the…
Q: Pls answer this question with solutions. In 20x1, LUMINOUS SHINING Co. recalled a product due to a…
A: Provision is recognized at the reasonable estimate of the probable loss.
Q: Suppose your company has just found $100,000 worth of outdated inventory in an old warehouse (this…
A: The decision to resell or scrap inventory is done based on the profitability of both options. The…
Q: Platinum Web Services designs and maintains websites for small business entrepreneurs. Competition…
A: A predetermined overhead rate is an allocation rate that is used to apply the estimated cost of…
Q: e company should purchase an expensive new machine from Radi Ltd, where her brother is the new sales…
A: Standards of ethical conducts can be defined as the standards that should be followed by the members…
Q: Answer the following questions. 1. A company has an inventory of 1,150 assorted parts for a line of…
A: To determine which of the proposed action may be beneficial for the company, future benefits shall…
Q: Dropping a product line, selling more tours. Nelson River Tours, a division of Old World Travel,…
A: 1. State the effect that the company would drop the advanced tours.
Q: Describing and identifying information relevant to business decisions Dan Jacobs, production manager…
A:
Q: PROBLEM SOLVING. Solve for what is asked far. Use the space provided for your answer and complete…
A: Implicit Cost: In economics, an implicit cost, also called an imputed cost and payment is not made…
Q: SHOW YOUR SOLUTION IN GOOD ACCOUNTING FORM Copycat manufacturing company is subject to a 30%…
A: solution given Tax rate 30% Revised variable cost =22-3.5+5.5 =24 Existing fixed…
Q: Carfax provides various services to supply vehicle reports to consumers. Carfax is subsidiary of R.L…
A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: P4.4 (LO 1,2), AN Most manufacturing companies have gross margin goals, and Murphy's is no…
A: The CVP (Cost volume profit) analysis is one of the vital techniques of management accounting. It…
Q: Muhammad Raza company is a producer of pastries. The company hires an economist to determine the…
A: The demand mechanism states that if all other factors like income, likings, economical…
Q: Making decisions about dropping a product Members of the board of directors of Security Team have…
A: 1. Security Team should not drop the industrial system product line because if Security Team drops…
Q: Sophia & More Company sells clothing, shoes and accessories at a city location near you.…
A: Income Statement as per Variable Costing
Q: Problem Situation: MVM Corporation seeks to partner with another company by letting them use and…
A: The working note and the answer of the above question is given in the below steps.
Q: Question 2 Jack Knife Electronics manufactures audio speakers for desktop computers. The following…
A: in the given question the first point is about calculation of the profit and also if the sales get…
Q: Top managers of Video Avenue are alarmed by their operating losses. They are considering dropping…
A: Operating income/(loss)=Sale-Variable cost-Fixed cost
Q: Key success factors. Dominic Consulting has issued a report recommending changes for its newest…
A:
Q: Stylish Sitting is a retailer of office chairs located in San Francisco, California. Due to…
A: Surplus or deficit in the income statement is the excess or shortfall of operating income of the…
Q: B-You is a consulting firm that works with managers to improve their interpersonal skills. Recently,…
A: Differential cost is the difference in the cost of two different decisions, or a change in the…
Q: QUESTION 1 Ashby Associates is an architectural fim located in Barbados that has been in practice…
A: Answer i. Ashby Associates’ strategy for 2019 is cost leadership. Ashby Associates is trying to grab…
Q: Determine whether each request is relatively more managerial accounting oriented or financial…
A: Managerial accounting oriented is that accounting information which is for internal use of business…
please choose the correct answer
Imagine you are a manager. Your company has an opportunity to venture out into a new market with a new product. However, your current resources are limited. In order to take the opportunity, you need to discontinue the production of one of your existing products. Your company’s accountant provided you with the following information to help you decide which product to discontinue. Product A Income 5,000,000 Expenses 4,800,000 Product B Income 3,500,000 Expenses 2,275,000 Product C Income 2,100,000 Expenses 630,000
A. Product A
B. Product B
C. Product C
D. All them
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Howard Cooper, the president of Vernon Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required A Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 42,000 hours of services in Year 3. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Vernon charges customers $83 per hour, the firm can achieve 52,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if…Howard Cooper, the president of Thornton Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 42,000 hours of services in Year 3. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Thornton charges customers $79 per hour, the firm can achieve 48,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if the…Howard Cooper, the president of Stuart Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 30,000 hours of services in Year 3. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Stuart charges customers $80 per hour, the firm can achieve 36,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if the firm…
- The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $179,000 of the fixed manufacturing expenses and $155,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would $ 745,000 $ 387,000 $ 253,400 $216,200 decline increase by if product B90D were dropped. Therefore, the product droppedEthics and professional conduct in business Erin Haywood was recently hired as a cost analyst by Wind River Medical Supplies Inc. Oneof Erin’s first assignments was to perform a net present value analysis for a new warehouse.Et-in performed the analysis and calculated a present value index of 0.8. The plant manager.ZuhairBarbat, is very intent on purchasing the warehouse because he believes that more storage space is needed. Zuhair asks Erín into his office and the following conversation takes place: ZubairErín, you’re new here, aren’t you? EHii: Yes, sir. Zubair: V.dl, Erin, let me tell you something. ¡m not at all pleased with the capital investment analysis that you performed on this new warehouse. T need that warehouse for my production. If I dont get it, where am I going to place our output? Erín: Hopefully with the customer, sir. Zithair: Now don’t get smart with me. Erín: No, really. I was being serious. My analysis does not support constructing a new ware- house. The numbers don’t lie: the warehouse does not meet our investment return targets. In fact, it seems to me that purchasing a warehouse dots not add much value to the business. We need to be producing product to satisfy customer orders, not to fill a warehouse. Zubair Listen, you need to understand sonwthing. The headquarters people will not allow mv to build the warehouse if the numbers dont add up. You know as well as I that many assump tions go into your net present value analysis. Why don’t you relax some of your assumptions so that the f́nancial savings will offset the cost? Erín: I’m willing to discuss my assumptions with you. Maybe I overlooked something. Zubafr Good. Here’s what I want you to do. 1 see in your analysis tha you don’t project greater sales as a result of the warehouse. It seems to me, if we can store more goxLs, then will have more to sell. Thus, logically, a larger warehouse translates into more sales. If you incorporate this into your analysis, I think you’ll see that the numbers will work out. Why don’t you work it through and come back with a new analysis? I’m really counting on you on this one. Let’s get off to a good start together and see if we can get this project accepted. What is your advice to Erin?Note that Barbaras Bistro in Figure 1-2 prepares monthly performance reports. Do you think that it would be a good idea for Barbara to switch to just an annual performance report in an effort to reduce its accounting costs?
- Ethics in Action Danielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielles first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and determined a present value index of 0.75. The plant manager, Jerrod Moore, is very intent on purchasing the warehouse because he believes that more storage space is needed. Jerrod asks Danielle into his office and the following conversation takes place: Jerrod: Danielle, youre new here, arent you? Danielle: Yes, I am. Jerrod: Well, Danielle, Im not at all pleased with the capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I dont get it, where am I going to place our output? Danielle: Well, we need to get product into our customers hands. Jerrod: I agree, and we need a warehouse to do that. Danielle: My analysis does not support constructing a new warehouse. The numbers dont lie; the warehouse does not meet our investment return targets. In fact, it seems to me that purchasing a warehouse does not add much value to the business. We need to be producing product to satisfy customer orders, not to fill a warehouse. Jerrod: The headquarters people will not allow me to build the warehouse if the numbers dont add up. You know as well as I that many assumptions go into your net present value analysis. Why dont you relax some of your assumptions so that the financial savings will offset the cost? Danielle: Im willing to discuss my assumptions with you. Maybe I overlooked something. Jerrod: Good. Heres what I want you to do. I see in your analysis that you dont project greater sales as a result of the warehouse. It seems to me that if we can store more goods, then we will have more to sell. Thus, logically, a larger warehouse translates into more sales. If you incorporate this into your analysis, I think youll see that the numbers will work out. Why dont you work it through and come back with a new analysis. Im really counting on you on this one. Lets get off to a good start together and see if we can get this project accepted. What is your advice to Danielle?Cost Information and Ethical Behavior, Service Organization Jean Erickson, manager and owner of an advertising company in Charlotte, North Carolina, arranged a meeting with Leroy Gee, the chief accountant of a large, local competitor. The two are lifelong friends. They grew up together in a small town and attended the same university. Leroy is a competent, successful accountant but is having some personal financial difficulties after some of his investments turned sour, leaving him with a 15,000 personal loan to pay offjust when his oldest son is starting college. Jean, on the other hand, is struggling to establish a successful advertising business. She had recently acquired the rights to open a branch office of a large regional advertising firm headquartered in Atlanta, Georgia. During her first 2 years, she was able to build a small, profitable practice. However, the chance to gain a significant foothold in Charlotte hinged on the success of winning a bid to represent the state of North Carolina in a major campaign to attract new industry and tourism. The meeting she had scheduled with Leroy concerned the bid she planned to submit. Jean: Leroy, Im at a critical point in my business venture. If I can win the bid for the states advertising dollars, Ill be set. Winning the bid will bring 600,000 to 700,000 of revenues into the firm. On top of that, I estimate that the publicity will bring another 200,000 to 300,000 of new business. Leroy: I understand. My boss is anxious to win that business as well. It would mean a huge increase in profits for my firm. Its a competitive business, though. As new as you are, I doubt that youll have much chance of winning. Jean: Youre forgetting two very important considerations. First, I have the backing of all the resources and talent of a regional firm. Second, I have some political connections. Last year, I was hired to run the publicity side of the governors campaign. He was impressed with my work and would like me to have this business. I am confident that the proposals I submit will be very competitive. My only concern is to submit a bid that beats your firm. If I come in with a lower bid and good proposals, the governor can see to it that I get the work. Leroy: Sounds promising. If you do win, however, there will be a lot of upset people. After all, they are going to claim that the business should have been given to local advertisers, not to some out-of-state firm. Given the size of your office, youll have to get support from Atlanta. You could take a lot of heat. Jean: True. But I am the owner of the branch office. That fact alone should blunt most of the criticism. Who can argue that Im not a local? Listen, with your help, I think I can win this bid. Furthermore, if I do win it, you can reap some direct benefits. With that kind of business, I can afford to hire an accountant, and Ill make it worthwhile for you to transfer jobs. I can offer you an up-front bonus of 15,000. On top of that, Ill increase your annual salary by 20%. That should solve most of your financial difficulties. After all, we have been friends since day oneand what are friends for? Leroy: Jean, my wife would be ecstatic if I were able to improve our financial position as quickly as this opportunity affords. I certainly hope that you win the bid. What kind of help can I provide? Jean: Simple. To win, all I have to do is beat the bid of your firm. Before I submit my bid, I would like you to review it. With the financial skills you have, it should be easy for you to spot any excessive costs that I may have included. Or perhaps I included the wrong kind of costs. By cutting excessive costs and eliminating costs that may not be directly related to the project, my bid should be competitive enough to meet or beat your firms bid. Required: 1. What would you do if you were Leroy? Fully explain the reasons for your choice. What do you suppose the code of conduct for Leroys company would say about this situation? 2. What is the likely outcome if Leroy agrees to review the bid? Is there much risk to him personally if he reviews the bid? Should the degree of risk have any bearing on his decision?In The Trouble with Outsourcing, a Schumpeter column in The Economist, there is a statement of advice to companies, who outsource products or services: they need to think harder about what is their core business, and what is peripheral. What types of problems do you think they are talking about? In your answer, present at least five (5) problems that companies should consider when outsourcing products or services.
- You work for Alphabet Holdings Plc as a junior management accountant. The board of directors are considering ways to improve the suboptimal performance of an investment in a manufacturing company called DEF products Ltd. As you can see from the table below the directors are considering closing products Bozon and Carbon in an effort to improve overall profitability. You spot that marginal costing would show the results differently and may affect the directors’ decision. Requirements for Question 2 Use your knowledge of management accounting and marginal costing to calculate the contribution of each product Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Bozon Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Carbon Discuss how and why marginal costing calculates contribution to pay overheads and why this is…14 Howard Cooper, the president of Finch Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 36,000 hours of services in Year 3. Required Required Required A B с $ b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Finch charges customers $80 per hour, the firm can achieve 45,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same…control risk, inherent risk, detection risk, RMM? Explain why? IR/CR yes or no? RMM and DR increase,decrease or no effect? Factor IR Factor CR Factor Why? Comments Impact on RMM Impact on DR 1 Apollo advanced $1.25 million to Larry Lancaster’s secretary. 2 Apollo does not have adequate documentation supporting customer returns of product. 3 Apollo has maintained a positive trend in net income over the past several years, and has a strategic emphasis on meeting profitability targets. 4 Apollo has not allowed your firm to speak with the predecessor auditor about their withdrawal after last year’s engagement. 5 Apollo installed a new computer system mid-year.
