Mountain Outfitters operates a large outdoor clothing and equipment store with tnree main product lines: clothing, equipment, and shoes. Mountain Outfitters operates at capacity and allocates selling, general, and administration (S, G & A) costs to each product line using the cost of merchandise of each product line. The company wants to optimize the prícing and cost management of each product line and is wondering if its accounting system is providing it with the best information for making such decisions. Store manager Aaron Budd gathers the following information regarding the three product lines: Mountain Outfitters Budgeted Product-Line Information For the Year Ended December 31, 2017 Clothing $1,440,000 $ 850,000 200 Equipment $1,840,000 $1,250,000 Shoes Total Revenues $720,000 $4,000,000 $2,500,000 Cost of merchandise Number of purchase orders placed Number of boxes received $400,000 125 175 500 450 200 350 1,000 16,000 Square feet of store space 4,500 10,000 1,500 For 2017, Mountain Outfitters budgets the following selling, general, and administration costs: Mountain Outfitters Selling, General, and Administration (S, G & A) Costs For the Year Ended December 31, 2017 Purchasing department expense Receiving department expense Customer support expense (cashiers and floor employees) Rent $ 320,000 210,000 250,000 240,000 100,000 General store advertising Store manager's salary 125,000 $1,245,000
Mountain Outfitters operates a large outdoor clothing and equipment store with tnree main product lines: clothing, equipment, and shoes. Mountain Outfitters operates at capacity and allocates selling, general, and administration (S, G & A) costs to each product line using the cost of merchandise of each product line. The company wants to optimize the prícing and cost management of each product line and is wondering if its accounting system is providing it with the best information for making such decisions. Store manager Aaron Budd gathers the following information regarding the three product lines: Mountain Outfitters Budgeted Product-Line Information For the Year Ended December 31, 2017 Clothing $1,440,000 $ 850,000 200 Equipment $1,840,000 $1,250,000 Shoes Total Revenues $720,000 $4,000,000 $2,500,000 Cost of merchandise Number of purchase orders placed Number of boxes received $400,000 125 175 500 450 200 350 1,000 16,000 Square feet of store space 4,500 10,000 1,500 For 2017, Mountain Outfitters budgets the following selling, general, and administration costs: Mountain Outfitters Selling, General, and Administration (S, G & A) Costs For the Year Ended December 31, 2017 Purchasing department expense Receiving department expense Customer support expense (cashiers and floor employees) Rent $ 320,000 210,000 250,000 240,000 100,000 General store advertising Store manager's salary 125,000 $1,245,000
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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Write a memo to Mountain Outfitters management describing how the improved system might be useful for managing the store.
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