jj1 Brook Cities Sports (BCS) is a distributor of sports footwear and equipment.(Click the icon to view product and customer type information.)BCS's management has set a strategic goal to improve both product and customer profitability. A relatedsubgoal that supports this strategy is to identify profitable products and customers using anaccurate cost-accounting system. BCS currently uses a simple cost-accounting system to calculate bothproduct and customer profitability. The only direct costs are the purchase costs of footwear and equipmentproducts. BCS allocates indirect costs to the product groups using a single indirect cost pool for all indirectcosts with "pounds of product" as the cost allocation base. Cost and operating data accumulated for the mostrecent year follow:(Click the icon to view the cost and operating data.)Read the requirements.Requirement 1. Prepare a schedule that shows the gross margin of each product group.FootwearEquipmentSalesCost of sales***Purchase costIndirect costTotal cost of salesGross product marginRequirement 2. Prepare a schedule that shows the gross margin of each customer type. (Round gross marginper case amounts to the nearest cent.)FootwearEquipmentGross margin per caseSpecialty StoresDepartment StoresCases sold Gross margin Cases sold Gross marginRequirement 3. Based on your answers to numbers 1 and 2, recommend a strategy to improve customerprofitability.The gross margin per case of equipment is larger so more emphasis should be placed on equipment sales,especially at department stores. Data tableProduct DataAnnual demand in casesAverage purchase cost per caseAverage weight per purchased caseAverage sales price per caseStoresFootwear demand in casesEquipment demand in casesTotal annual demand in casesOrdersFootwearCustomer Data2,800$ 8519.25 pounds$ 460PrintSpecialty Stores1,1003001,400140EquipmentDone2,000$ 12530.5 pounds$ 805The cost-allocation base used to allocate this pool to the two productgroups is pounds of product sold.DepartmentOther DataA single cost pool consists of resources needed to perform receiving.storing, picking, packing, shipping, order processing, and customer serviceactivities. The annual cost of these resources is $1,378,800.1,7001,7003,40068

Managerial accounting helps the management in taking correct decision at right time. The analysis of…

BCS's management has set a strategic goal to improve both product and customer profitability. A related subgoal that supports this strategy is to identify profitable products and customers using an accurate cost-accounting system. BCS currently uses a simple cost-accounting system to calculate both product and customer profitability. The only direct costs are the purchase costs of footwear and equipment products. BCS allocates indirect costs to the product groups using a single indirect cost pool for all indirect costs with "pounds of product" as the cost allocation base. Cost and operating data accumulated for the most recent year follow:

BCS's management has set a strategic goal to improve both product and customer profitability. A related subgoal that supports this strategy is to identify profitable products and customers using an accurate cost-accounting system. BCS currently uses a simple cost-accounting system to calculate both product and customer profitability. The only direct costs are the purchase costs of footwear and equipment products. BCS allocates indirect costs to the product groups using a single indirect cost pool for all indirect costs with "pounds of product" as the cost allocation base. Cost and operating data accumulated for the most recent year follow:

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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