Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $660,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? Req A1 Chairs $1,046,500 585,000 130,000 Complete this question by entering your answers in the tabs below. Reg A2 Chairs Desks Desks $1,950,000 810,000 300,000 Req B Based on the CFO's new policy, calculate the profit margin for both chairs and desks. Profit Margin % %
Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $660,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? Req A1 Chairs $1,046,500 585,000 130,000 Complete this question by entering your answers in the tabs below. Reg A2 Chairs Desks Desks $1,950,000 810,000 300,000 Req B Based on the CFO's new policy, calculate the profit margin for both chairs and desks. Profit Margin % %
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter18: Activity-based Costing
Section: Chapter Questions
Problem 13E: Handbrain Inc. is considering a change to activity-based product costing. The company produces two...
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