Gross Margin Percent Essay

The most suitable costing method Yeltin should adopt is the practical capacity in order to remove the factor of uncertain budgeted sales figure. For this approach and the practical capacity of 65000-22000 units, then the revised overhead costs come out to be $30. With the inclusion of material and labor costs, the cost of the cartridge stand at $52 and the additional royalty expense of $10 raises the overall per unit cost to $62. The selling price of the cartridge is fixed at $150. With this selling price, the gross margin is equal to $88. The gross margin percentage is equal to 59%. In comparison to the budgeted volume, the gross margin has increased by 14%. See below

Second, the manufacturing order costs for non-stocked items was calculated by dividing total manufacturing order costs for non-stocked items by the number of orders for non-stocked products. Non-stocked products have additional costs associated with processing orders that went above and beyond the costs associated with a stocked product. The third step involved determining what the S"A allocation factor would be for calculating the S"A volume related costs. This allocation factor would then be applied to manufacturing COGS. The fourth and final step involved the calculation of the operating profit based on backing out volume related costs from sales revenues followed by deducting S"A and manufacturing order costs from the resulting gross margin to arrive at a operating profit.

Standard costing cannot be used in companies that produce heterogeneous products since it works only where the components and processes are the same and repeat themselves and this result in production of identical goods and services. This does not take into account customer preferences since customers need diverse types of goods. This makes it difficult to be applied in many accounting

The account issue addressed in this case study was whether to continue with the existing costing method for each product line or implement a activity-based costing method. The ABC method allows for an organization to allocate direct and indirect costs to products and obtain an accurate level of costs and profit for each unit produced, thus allowing the company to improve their overall operational effectiveness. ABC does differ from the existing costing method described in the case as the old method does not account for volume related overhead costs which must be allocated to the specific ODD and TGC products.

2. Assume that there is no January 1, 20X7, inventory; no variances are allocated to inventory; and the firm uses a “full absorption” approach to product costing. Compute:

(a) The firm will produce 4 units of output. At that level, marginal revenue ($25) is greater than marginal cost ($15), but as close to equality as possible. Total profit will be $90 ($160 – $70).

We must calculate the average stock on hand for each item (safety stock + ½ order lot size), and must calculate the cost per item (unit cost plus freight). For the first item—gas ranges—a safety stock of 40 units is maintained, and ½ the order lot size is 100 units, for a total inventory in stock of 140 units. Unit cost ($100) plus freight ($20) equals $120. Multiplying average inventory (140) times $120 equals $16,800. Doing all the items on table gives a total of $96,175. Because this is a 10% sample, the total parts inventory would be worth $961,750. Inventory carrying costs on this, at 20% per year, would be

The gross profit margin for each product produced based on the ABC data can be determined by the selling price minus the ABC cost per unit multiplied by the units produced (Edmonds, Tsay, & Olds, 2011). Product GS-157, selling price per unit $19.30 minus ABC cost per unit $12.50 equals $6.80 multiplied by the units produced 120,000 equals the ABC gross profit margin $816,000 (Edmonds, Tsay, & Olds, 2011). Product HS-241, selling price per unit $17.50 minus ABC cost per unit $11.67 equals $5.83 multiplied by the units produced 90,000 equals the ABC gross profit margin $525,000 (Edmonds, Tsay, & Olds, 2011). Product OS-367. Selling price per unit $15.10 minus ABC cost per unit $13.75 equals $1.35 multiplied by the units produced 40,000 equals

7. Though numbers given in the cost data can not be contested, I would definitely contest the way total cost has been computed. The item 345 department operates within a large manufacturing facility that churns out number of other products too. Hence judging the profitability of item 345 on the basis of total cost is not practical.

If the company sells 172,983 units of the Velcro product, 211,801 units of the Metal product, and 268,943 units of the Nylon product, the company will indeed break even overall. However, the apparent break-evens for two of the products are higher than their normal annual sales.

The unit selling price at 150,000 units is $0.17. The expected unit selling price for 25,000 units is $0.1.

1. Candice Corporation has decided to introduce a new product. The product can be manufactured using either a capital-intensive or labor-intensive method. The manufacturing method will not affect the quality or sales of the product. The estimated manufacturing costs of the two methods are as follows:

The Martinez Company has decided to introduce a new product and would like to evaluate the costs of manufacturing through capital intensive and labor intensive manufacturing methods to determine which of the two methods to employ. The values to be used in the evaluation for capital intensive manufacturing are direct materials at $5 per unit, direct labor at $6 per unit, a variable overhead of $3 per unit, and fixed manufacturing costs of $2,508,000. The values for material, labor, and overhead are summed to find the total variable cost of $14. The labor intensive values are direct materials at $5.50 per unit, direct labor at $8 per

One important step in defining the price of any given product is to define an interval where it would be beneficial both for the company and for the costumers. The minimum value that we could possible charge for each product is the average production cost, which is $444 (without tooling) and $208 (with tooling). On the upper side of the interval we have the value that is perceived by the customer. This is the so called Perceived-Value Pricing. Perceived-Value is a multidimensional vector, usually in its dimensions we have: product performance, warranty quality, customer support, company’s reputation, etc... In order to compute Perceived-Value of the CMI cushion pads we are going to compute the saving by using CMI pads instead of the conventional ones. Next will be presented the data

The Specialty Toys Company faces a challenge of deciding how many units of a new toy should be purchased to meet anticipated sales demand. If too few are purchased, sales will be lost; if too many are purchased, profits will be reduced because of low prices realized in clearance sales. Here, I will help to analyze an appropriate order quantity for the company.