Fundamentals of Cost Accounting
5th Edition
ISBN: 9781259565403
Author: William N. Lanen Professor, Shannon Anderson Associate Professor, Michael W Maher
Publisher: McGraw-Hill Education
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Chapter 10, Problem 54P
a.
To determine
Determine the excess of gross margin over customer cost.
b.
To determine
Write a memo with respect to the information given in the question.
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Product Profitability Analysis
Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS), the Conquistador and Hurricane, from a single manufacturing facility.
The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products:
Conquistador
Hurricane
Sales price
$4,800
$3,200
Variable cost of goods sold
(3,020)
(2,140)
Manufacturing margin
$1,780
$1,060
Variable selling expenses
(964)
(548)
Contribution margin
$816
$512
Fixed expenses
(380)
(200)
Operating income
$436
$312
In addition, the following sales unit volume information for the period is as follows:
Conquistador
2,800
Hurricane
2,000
Sales unit volume
a. Prepare a contribution margin by product report. Compute the contribution margin ratjo for each product as a whole percent.
Galaxy Sports Inc.
Contribution Margin by Product
Product Profitability Analysis
Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS), the Conquistador and Hurricane, from a single manufacturing facility. The
manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products:
Conquistador
Hurricane
Sales price
$4,800
$3,200
Variable cost of goods sold
(3,020)
(2,140)
Manufacturing margin
$1,780
$1,060
Variable selling expenses
(916)
(516)
Contribution margin
$864
$544
Fixed expenses
(410)
(220)
Operating income
$454
$324
In addition, the following sales unit volume information for the period is as follows:
Conquistador
Hurricane
Sales unit volume
2,800
2,000
Analyzing profitability
Relative Furniture Company manufactures and sells oak tables and chairs. Price and cost data for the furniture follow:
Relative Furniture has three sales representatives: Abe, Brett, and Corrin. Abe sold 50 tables With 4 Chairs each. Brett sold 110 tables With 6 chairs each. Corrin sold 90 tables with 8 chairs each.
Requirements
Calculate the total contribution margin and the contribution margin ratio for each sales representative (round to two decimal places).
Which sales representative has the highest contribution margin ratio? Explain why.
Chapter 10 Solutions
Fundamentals of Cost Accounting
Ch. 10 - How are activity-based costing and activity-based...Ch. 10 - Can activity-based management be implemented...Ch. 10 - Prob. 3RQCh. 10 - What are some ways in which customers affect a...Ch. 10 - How is computing the cost of customers the same as...Ch. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Under what conditions should the cost of excess...Ch. 10 - In what ways does quality affect cost?Ch. 10 - What are the four categories in a cost of quality...
Ch. 10 - Prob. 11CADQCh. 10 - Prob. 12CADQCh. 10 - Consider a library that spends 25,000 to move most...Ch. 10 - Prob. 14CADQCh. 10 - Prob. 15CADQCh. 10 - You can get the cost of customers by first...Ch. 10 - Prob. 17CADQCh. 10 - Prob. 18CADQCh. 10 - Prob. 19CADQCh. 10 - Prob. 20CADQCh. 10 - Many if not most schools in the United States have...Ch. 10 - Prob. 22CADQCh. 10 - Prob. 23CADQCh. 10 - Prob. 24ECh. 10 - Prob. 25ECh. 10 - Cost Hierarchy for a Not-for-Profit Below are...Ch. 10 - Prob. 27ECh. 10 - Driver Identification Below are various activities...Ch. 10 - Activity-Based Costing of Customers Marvins...Ch. 10 - Activity-Based Costing of Customers Rock Solid...Ch. 10 - Activity-Based Costing of Customers Refer to the...Ch. 10 - Activity-Based Costing of Customers: Ethical...Ch. 10 - Prob. 33ECh. 10 - Activity-Based Costing of Suppliers Hult Games...Ch. 10 - Prob. 35ECh. 10 - Activity-Based Costing of Suppliers Kinnear...Ch. 10 - Activity-Based Costing of Suppliers Refer to the...Ch. 10 - Resources Used versus Resources Supplied Tri-State...Ch. 10 - Prob. 39ECh. 10 - Resources Used versus Resources Supplied Conlon...Ch. 10 - Prob. 41ECh. 10 - Prob. 42ECh. 10 - Assigning Cost of Capacity Mimis Fixtures...Ch. 10 - Assigning Cost of Capacity Curts Casting...Ch. 10 - Prob. 45ECh. 10 - Costs of Quality The following represents the...Ch. 10 - Trading-Off Costs of Quality Using the costs...Ch. 10 - Costs of Quality Nuke-It-Now manufactures...Ch. 10 - Prob. 49ECh. 10 - Cost of Quality: Environmental Issues Many...Ch. 10 - Prob. 51ECh. 10 - Prob. 52PCh. 10 - Activity-Based Reporting: Service Organization...Ch. 10 - Prob. 54PCh. 10 - Customer Profitability Carmel Company has a...Ch. 10 - Activity-Based Costing of Suppliers JFI Foods...Ch. 10 - Activity-Based Costing of Suppliers Consider the...Ch. 10 - Activity-Based Reporting: Manufacturing...Ch. 10 - Assigning Capacity Costs Cathy and Toms Specialty...Ch. 10 - Prob. 60PCh. 10 - Prob. 61PCh. 10 - Assigning Capacity Costs Mercia Chocolates...Ch. 10 - Prob. 63PCh. 10 - Prob. 64PCh. 10 - Prob. 65P
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