Help me solve number 3.Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. Keep-Or-Drop Decision, Alternatives, Relevant CostsReshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advancedmodel with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statementis shown below.SalesLess variable costs of goods soldLess commissionsContribution marginLess common fixed expenses:Fixed factory overheadFixed selling and administrativeOperating incomeActivityEngineeringSetting upCustomer serviceModel 1$275,000(96,500)(5,700)$172,800$86,000177,000101,000Activity Cost Activity DriverEngineering hoursModel 2Setup hoursService calls$598,000(175,960)(36,000)$386,040While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10 percent of sales and is low for this type ofcompany. The company's controller gathered additional information on fixed costs to see why they were so high. The following information on activities and drivers wasgathered:Model 1780Model 3$659,500(336,400)(23,000)$300,10013,00014,200Total$1,532,500(608,860)(64,700)$858,940(415,000)(307,000)$136,94012,7001,400Driver Usaby ModelModel 274Model 314629,14619,146 3. What if Reshier Company can only avoid 160 hours of engineering time and 5,000 hours of setup time that are attributable to Model 1? How does that affect thealternatives presented in Requirement 2? Which alternative is more cost effective and by how much? Do NOT round interim calculations and, if required, roundyour answer to the nearest dollar.Keeping Model 1✔will add $ 158,178 X to operating income

In order to get the benefits out from the decreasing of the hours used in the model 1 a new…

3. What if Reshier Company can only avoid 160 hours of engineering time and 5,000 hours of setup time that are attributable to Model 1? How does that affect the alternatives presented in Requirement 2? Which alternative is more cost effective and by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar. Keeping Model 1 ✔will add $ 158,178 X to operating income

3. What if Reshier Company can only avoid 160 hours of engineering time and 5,000 hours of setup time that are attributable to Model 1? How does that affect the alternatives presented in Requirement 2? Which alternative is more cost effective and by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar. Keeping Model 1 ✔will add $ 158,178 X to operating income

Managerial Accounting

15th Edition

ISBN:9781337912020

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

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

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 2CMA: The Chocolate Baker specializes in chocolate baked goods. The firm has long assessed the...

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Evaluating selling and administrative cost allocations Gordon Gecco Furniture Company has two major product lines with the following characteristics: Commercial office furniture: Few large orders, little advertising support, shipments in full truckloads, and low handling complexity Home office furniture: Many small orders, large advertising support, shipments in partial truckloads, and high handling complexity The company produced the following profitability report for management: The selling and administrative expenses are allocated to the products on the basis of relative sales dollars. Evaluate the accuracy of this report and recommend an alternative approach.
Assign the customer-related activity costs to each customer type using activity rates. Now calculate the profitability of each customer category. As a manager, how would you use this information? Emery Company sells small machine parts to heavy equipment manufacturers for an average price of 1.05 per part. There are two types of customers: those who place small, frequent orders and those who place larger, less frequent orders. Each time an order is placed and processed, a setup is required. Scheduling is also needed to coordinate the many different orders that come in and place demands on the plants manufacturing resources. Emery also inspects a sample of the products each time a batch is produced to ensure that the customers specifications have been met Inspection takes essentially the same time regardless of the type of part being produced. Emerys Cost Accounting Department has provided the following budgeted data for customer-related activities and costs (the amounts expected for the coming year): Required: 1. Assign the customer-related activity costs to each category of customers in proportion to the sales revenue earned by each customer type. Calculate the profitability of each customer type. Discuss the problems with this measure of customer profitability.
The Chocolate Baker specializes in chocolate baked goods. The firm has long assessed the profitability of a product line by comparing revenues to the cost of goods sold. However, Barry White, the firms new accountant, wants to use an activity-based costing system that takes into consideration the cost of the delivery person. Following are activity and cost information relating to two of Chocolate Bakers major products: Using activity-based costing, which of the following statements is correct? a. The muffins are 2,000 more profitable. b. The cheesecakes are 75 more profitable. c. The muffins are 1,925 more profitable. d. The muffins have a higher profitability as a percentage of sales and, therefore, are more advantageous.
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $230,000 $562,000 $650,500 $1,442,500 Less variable costs of goods sold (88,000) (159,240) (364,400) (611,640) Less commissions (5,400) (39,000) (21,750) (66,150)      Contribution margin $136,600 $363,760 $264,350 $764,710 Less common fixed expenses:      Fixed factory overhead (400,000)      Fixed selling and administrative (299,000) Operating income $65,710 While all models have positive contribution margins, Reshier Company is…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $235,000 $590,000 $658,500 $1,483,500 Less variable costs of goods sold (91,500) (166,280) (356,000) (613,780) Less commissions (5,700) (40,000) (21,750) (67,450)      Contribution margin $137,800 $383,720 $280,750 $802,270 Less common fixed expenses: Fixed factory overhead (385,000) Fixed selling and administrative (307,000) Operating income $110,270 While all models have positive contribution margins, Reshier Company is concerned…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $590,000 $619,500 $1,459,500 Less variable costs of goods sold (86,000) (160,560) (332,800) (579,360) Less commissions (5,200) (34,500) (23,750) (63,450)      Contribution margin $158,800 $394,940 $262,950 $816,690 Less common fixed expenses:      Fixed factory overhead (375,000)      Fixed selling and administrative (283,000) Operating income $158,690 While all models have positive contribution margins, Reshier Company is…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $586,000 $607,000 $1,443,000 Less variable costs of goods sold (90,000) (173,760) (334,400) (598,160) Less commissions (5,200) (36,000) (19,250) (60,450)      Contribution margin $154,800 $376,240 $253,350 $784,390 Less common fixed expenses:      Fixed factory overhead (405,000)      Fixed selling and administrative (291,000) Operating income $88,390 While all models have positive contribution margins, Reshier Company is…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $586,000 $607,000 $1,443,000 Less variable costs of goods sold (90,000) (173,760) (334,400) (598,160) Less commissions (5,200) (36,000) (19,250) (60,450)      Contribution margin $154,800 $376,240 $253,350 $784,390 Less common fixed expenses:      Fixed factory overhead (405,000)      Fixed selling and administrative (291,000) Operating income $88,390 While all models have positive contribution margins, Reshier Company is…
Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $245,000 $550,000 $619,500 $1,414,500 Less variable costs of goods sold (95,500) (172,440) (357,600) (625,540) Less commissions (4,000) (26,500) (21,250) (51,750)      Contribution margin $145,500 $351,060 $240,650 $737,210 Less common fixed expenses:      Fixed factory overhead (380,000)      Fixed selling and administrative (299,000) Operating income $58,210 While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10…
Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $590,000 $619,500 $1,459,500 Less variable costs of goods sold (86,000) (160,560) (332,800) (579,360) Less commissions (5,200) (34,500) (23,750) (63,450) Contribution margin $158,800 $394,940 $262,950 $816,690 Less common fixed expenses: Fixed factory overhead (375,000) Fixed selling and administrative (283,000) Operating income $158,690 While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10…
Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $225,000 $590,000 $648,500 $1,463,500 Less variable costs of goods sold (93,500) (168,040) (354,000) (615,540) Less commissions (4,000) (33,500) (23,000) (60,500) Contribution margin $127,500 $388,460 $271,500 $787,460 Less common fixed expenses: Fixed factory overhead (390,000) Fixed selling and administrative (283,000) Operating income $114,460 While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10…
Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JITdistributors and non -JIT distributors. The JIT distributor places small,frequent orders, and the non -JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product.Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter: Required:1. Calculate the total revenues per distributor category, and assignthe customer costs to each distributor type by using revenues asthe allocation base. Selling price for one unit is $150. 2. CONCEPTUAL CONNECTION Calculate the customer cost perdistributor type using activity-based cost assignments. Discuss themerits of offering the non -JIT distributors a $2 price decrease(assume that they are agitating for a price concession). 3. CONCEPTUAL CONNECTION Assume that the JIT distributors are simply imposing the frequent orders on…