Stenback Company sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the following data: 1(Click the icon to view the data.) Prepare an analysis to show which product the company should emphasize. (Enter the units displayed per square foot and the contribution margin per square foot to two decimal places.) Product Designer Moderately Priced Units displayed per square foot: Designer Moderately priced Contribution margin per unit × × Contribution margin per square foot of display space Capacity-Square feet of display space × × Total contribution margin at capacity Decision: (1) 1: Data Table Per Item Designer Moderately Priced Average sale price $220 $88 Average variable costs 100 20 Average contribution margin 120 68 Average fixed costs (allocated) 20 15 Average operating income $100 $53 The Stenback Company store in Grand Junction, Colorado, has 7,000 square feet of floor space. If Stenback Company emphasizes moderately priced goods, it can display 490 items in the store. If Stenback Company emphasizes designer wear, it can only display 210 designer items. These numbers are also the average monthly sales in units. (1) Emphasize moderately priced goods Emphasize designer goods
Stenback Company sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the following data: 1(Click the icon to view the data.) Prepare an analysis to show which product the company should emphasize. (Enter the units displayed per square foot and the contribution margin per square foot to two decimal places.) Product Designer Moderately Priced Units displayed per square foot: Designer Moderately priced Contribution margin per unit × × Contribution margin per square foot of display space Capacity-Square feet of display space × × Total contribution margin at capacity Decision: (1) 1: Data Table Per Item Designer Moderately Priced Average sale price $220 $88 Average variable costs 100 20 Average contribution margin 120 68 Average fixed costs (allocated) 20 15 Average operating income $100 $53 The Stenback Company store in Grand Junction, Colorado, has 7,000 square feet of floor space. If Stenback Company emphasizes moderately priced goods, it can display 490 items in the store. If Stenback Company emphasizes designer wear, it can only display 210 designer items. These numbers are also the average monthly sales in units. (1) Emphasize moderately priced goods Emphasize designer goods
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
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Problem 1MAD: Analyze Milkrageous, Inc. Milkragcous, Inc., a large, private dairy products company, is determining...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Stenback Company
sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the following data:1(Click
the icon to view the data.)Prepare an analysis to show which product the company should emphasize. (Enter the units displayed per square foot and the contribution margin per square foot to two decimal places.)
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Product
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Designer
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Moderately Priced
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Units displayed per square foot:
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Designer
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Moderately priced
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Contribution margin per unit
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×
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×
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Contribution margin per square foot of display space
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|||
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Capacity-Square feet of display space
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×
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×
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Total contribution margin at capacity
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Decision:
(1)
1: Data Table
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Per Item
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|---|---|---|
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Designer
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Moderately Priced
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Average sale price
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$220
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$88
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100
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20
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Average contribution margin
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120
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68
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Average fixed costs (allocated)
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20
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15
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Average operating income
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$100
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$53
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The
Stenback Company
store in Grand Junction, Colorado, has
7,000
square feet of floor space. If
Stenback Company
emphasizes moderately priced goods, it can display
490
items in the store. If
Stenback Company
emphasizes designer wear, it can only display
210
designer items. These numbers are also the average monthly sales in units. |
(1)
Emphasize moderately priced goods
Emphasize designer goods
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