Annual Costs of Operating Each Product Line Sales in units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous Total unit-level costs Product-level costs: Supervisors' salaries Facility-level costs: Rent Utilities Depreciation on equipment Allocated companywide expenses Total facility-level costs Product-Line Earnings Statements (Dollar amounts are in thousands) Total product cost Profit on products Anagen 450,000 $900,000 85,500 11,700 20,250 6,750 124,200 9,600 100,000 112,500 400,000 22,500 635,000 768,800 $131,200 Catagen 450,000 $900,000 85,500 11,700 18,000 4,500 119,700 7,200 100,000 112,500 400,000 22,500 635,000 761,900 $138,100 Luster 225,000 $450,000 46,200 6,000 9,000 2,250 63,450 2,400 50,000 56,250 200,000 11,250 317,500 383,350 $ 66,650 Total 1,125,000 $2,250,000 217,200 29,400 47,250 13,500 307,350 19,200 250,000 281,250 1,000,000 56,250 1,587,500 1,914,050 $ 335,950 Prepare revised product-line earnings statements based on the elimination of Luster. (Hint: It will be necessary to calculate some per-unit data to accomplish this.)
Annual Costs of Operating Each Product Line Sales in units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous Total unit-level costs Product-level costs: Supervisors' salaries Facility-level costs: Rent Utilities Depreciation on equipment Allocated companywide expenses Total facility-level costs Product-Line Earnings Statements (Dollar amounts are in thousands) Total product cost Profit on products Anagen 450,000 $900,000 85,500 11,700 20,250 6,750 124,200 9,600 100,000 112,500 400,000 22,500 635,000 768,800 $131,200 Catagen 450,000 $900,000 85,500 11,700 18,000 4,500 119,700 7,200 100,000 112,500 400,000 22,500 635,000 761,900 $138,100 Luster 225,000 $450,000 46,200 6,000 9,000 2,250 63,450 2,400 50,000 56,250 200,000 11,250 317,500 383,350 $ 66,650 Total 1,125,000 $2,250,000 217,200 29,400 47,250 13,500 307,350 19,200 250,000 281,250 1,000,000 56,250 1,587,500 1,914,050 $ 335,950 Prepare revised product-line earnings statements based on the elimination of Luster. (Hint: It will be necessary to calculate some per-unit data to accomplish this.)
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 19E
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Question
Consider the additional information presented as follows, which is hypothetical. All dollar amounts are in thousands, unit amounts are not. Assume that P&G decides to eliminate one shampoo product-line, Luster, for one of its segments that currently produces three products. As a result, the following are expected to occur.
Transcribed Image Text:Annual Costs of Operating
Each Product Line
Sales in units
Sales in dollars
Unit-level costs:
Cost of production
Sales commissions
Shipping and handling
Miscellaneous
Total unit-level costs
Product-level costs:
Supervisors' salaries
Facility-level costs:
Rent
Utilities
Depreciation on equipment
Allocated companywide expenses
Total facility-level costs
Product-Line Earnings Statements
(Dollar amounts are in thousands)
Total product cost
Profit on products
Anagen
450,000
$900,000
85,500
11,700
20,250
6,750
124,200
9,600
100,000
112,500
400,000
22,500
635,000
768,800
$131,200
Catagen
450,000
$900,000
85,500
11,700
18,000
4,500
119,700
7,200
100,000
112,500
400,000
22,500
635,000
761,900
$138,100
Luster
225,000
$450,000
46,200
6,000
9,000
2,250
63,450
2,400
50,000
56,250
200,000
11,250
317,500
383,350
$ 66,650
Total
1,125,000
$2,250,000
217,200
29,400
47,250
13,500
307,350
19,200
250,000
281,250
1,000,000
56,250
1,587,500
1,914,050
$ 335,950
Prepare revised product-line earnings statements based on the elimination of Luster. (Hint: It will be necessary to calculate
some per-unit data to accomplish this.)
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