product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. $ 134,000 47,000 11,000 22,000 107,000 30,000* 128,000 14,000 47,000 $500,000 4 192,000 308,000 348,000 $ (40,000) Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company's total general factory overhead or total Purchasing Department expenses. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?

product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. $ 134,000 47,000 11,000 22,000 107,000 30,000 128,000 14,000 47,000 $500,000 4 192,000 308,000 348,000 $ (40,000) Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company's total general factory overhead or total Purchasing Department expenses. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...

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Thalassines kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. +Common costs allocated on the basis of sales dollars. $ 135,000 45,000 11,000 29,000 102,000 38,000* 126,000 15,000 50,000+ $ 430,000 191,000 239,000 360,000 $ (121,000) Discontinuing the bilge pump product line would…
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. +Common costs allocated on the basis of sales dollars. $ 330,000 42,000 18,000 M 270,000 80,000 105,000* 32,000 8,000 45,000 $ 850,000 390,000 460,000 540,000 $ (80,000) Discontinuing the bilge pump product line would not…
The controller of Hall Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month TotalMaintenance Costs TotalMachine Hours January $2,817 3,734 February 3,201 4,268 March 3,841 6,402 April 4,801 8,429 May 3,414 5,335 June 4,930 8,536 Determine the variable-cost components using the high-low method. (Round variable cost to 2 decimal places e.g. 12.25.) Variable cost per machine hour $ eTextbook and Media Determine the fixed cost components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.) Fixed costs $
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump follows: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margini Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) General factory overhead Salary of product-Line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. *Common costs allocated on the basis of sales dollars. $ 130,000 54,000 21,000 22,000 115,000 36,000 120,000 14,000 57,000 $ 440,000 Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump? 205,000…
The controller of Blossom Industries has collected the following monthly expense data for use in analyzing the cost behaviour of maintenance costs: Total Total Month Maintenance Costs Machine Hours January $2,750 2,850 February 3,150 4,400 March 4,000 6.250 April 4,520 8,250 May 3,320 5.000 June 5,693 8,300 (a1) Determine the variable-cost component using the high-low method. (Round answer to 2 decimal places e.g. 12.25.)
S Conner's Fixtures produces and sells a single product, a specialized plumbing fixture. The business began operations on January 1 this year and its costs incurred during the year include the following: Variable costs (based on units produced): Direct materials cost Direct manufacturing labor costs Indirect manufacturing costs Administration and marketing Fixed costs: Administration and marketing costs Indirect manufacturing costs $ 24,000 108,000 21,600 13,500 72,000 24,000 At the end of the first year (December 31), direct materials inventory consisted of 7,500 pounds of material. Production in that year was 10,000 fixtures. All prices and unit variable costs remained constant during the year. Sales revenue for year 1 was $293,250. Finished goods inventory was $24.420 on December 31. Each finished fixture requires 3.20 pounds of material. Required: a. Compute the direct materials inventory cost, December 31. b. Compute the finished goods ending inventory in units (fixtures) on…
Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (440,000 units) Variable costs Direct materials Direct labor Overhead Contribution margin. Fixed costs Fixed overhead Fixed general and administrative Income Per Unit $15.00 2.00 4.00 2.50 6.50 2.00 1.50 $ 3.00 (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? Required A Required B Annual Total $ 6,600,000. 880,000 1,760,000 1,100,000 2,860,000 The company receives a special offer for 44,000 units at $12 per unit. The additional sales would not affect its normal sales. Variable costs per unit would be the same for the special offer as they are for the normal units. The special offer would require incremental fixed overhead of $176,000 and incremental fixed general and administrative costs of $189,000. 880,000 660,000 $ 1,320,000 Complete this question by entering your answers in the tabs below.
The controller of Sandhill Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month January February March April May June Variable cost per machine hour Total Maintenance Costs Determine the variable-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.) Determine the fixed cost components using the high-low method. Fixed costs $2,825 3,210 3,852 4,815 3,424 5,476 Total Machine Hours 3,740 4,280 6,420 8,453 5,350 8,560 $ $
Income Statements Segmented by TerritoryScript, Inc., has two product lines. The September income statements of each product line and the company are as follows: SCRIPT, INC.Product Line and Company Income StatementsFor Month of September Pens Pencils Total Sales $25,000 $30,000 $55,000 Less variable expenses (10,000) (12,000) (22,000) Contribution margin 15,000 18,000 33,000 Less direct fixed expenses (8,000) (6,000) (14,000) Product margin $7,000 $12,000 $19,000 Less common fixed expenses (6,000) Net income $13,000 Pens and pencils are sold in two territories, Florida and Alabama, as follows: Florida Alabama Pen sales $11,000 $14,000 Pencil sales 13,000 17,000 Total sales $24,000 $31,000 The preceding common fixed expenses are traceable to each territory as follows: Florida fixed expenses $2,000 Alabama fixed expenses 3,000 Home office administration fixed expenses 1,000 Total common fixed expenses $6,000 The…
Income Statements Segmented by TerritoryScript, Inc., has two product lines. The September income statements of each product line and the company are as follows: SCRIPT, INC.Product Line and Company Income StatementsFor Month of September Pens Pencils Total Sales $25,000 $30,000 $55,000 Less variable expenses (10,000) (12,000) (22,000) Contribution margin 15,000 18,000 33,000 Less direct fixed expenses (9,000) (8,000) (17,000) Product margin $6,000 $10,000 $16,000 Less common fixed expenses (6,000) Net income $10,000 Pens and pencils are sold in two territories, Florida and Alabama, as follows: Florida Alabama Pen sales $14,000 $11,000 Pencil sales 4,000 26,000 Total sales $18,000 $37,000 The preceding common fixed expenses are traceable to each territory as follows: Florida fixed expenses $2,000 Alabama fixed expenses 3,000 Home office administration fixed expenses 1,000 Total common fixed expenses $6,000 The…
The following information is available for a company's maintenance cost over the last seven months. Maintenance Cost Month Units Produced June 110 July 170 August 130 September 160 October 220 November December 250 70 $ 4,780 6,400 5,320 6,130 7,750 8,560 3,700 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. High-Low method - Calculation of variable cost per unit produced Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Total fixed costs Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per unit produced Total variable costs at the low point Total fixed costs
The following information is available for a company’s maintenance cost over the last seven months. Month Units Produced Maintenance Cost June 90 $ 4,190 July 180 6,260 August 120 4,880 September 150 5,570 October 210 6,950 November 240 7,640 December 60 3,500 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. High-Low method - Calculation of variable cost per maintenance hour 0 Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Total fixed costs Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per unit produced Total variable costs at the low point Total fixed costs