HORNGREN COST ACCT NON-MAJORS W/ACCESS
17th Edition
ISBN: 9781323703748
Author: Datar
Publisher: Pearson Custom Publishing
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 12, Problem 12.35P
Analysis of growth, price-recovery, and productivity components (continuation of 12-34).
Suppose that during 2017, the market for DVD players grew 10%. All increases in market share (that is, sales increases greater than 10%) and decreases in the selling price of the Orlicon are the result of Scott’s strategic actions.
Required
Calculate how much of the change in operating income from 2016 to 2017 is due to the industry-market-size factor, product differentiation, and cost leadership. How does this relate to Scott’s strategy and its success in implementation? Explain.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Analysis of growth, price-recovery, and productivity components (continuation of 12-19). An analysis of Pineway’s operating-income changes between 2016 and 2017 shows the following:
Reference:
Balanced scorecard. Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving customers’ orders. There are many other manufacturers who produce similar motors. Pineway believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy in 2017.
The Hydride Division of Murdoch Corporation is an investment center. It has $1,000,000 of operating assets. During 2015, the Hydride Division earned operating income of $400,000 on $6,000,000 of sales. Murdoch's companywide return on investment or desired rate of return is approximately 10%.
a. What is the ROI?
b. What is the margin?
c. What is the turnover?
d. What is the residual income?
Analyzing Operational ChangesOperating results for department B of Delta Company during 2016 are as follows:
Sales
$538,000
Cost of goods sold
378,000
Gross profit
160,000
Direct expenses
120,000
Common expenses
66,000
Total expenses
186,000
Net loss
$(26,000)
Suppose that department B could increase physical volume of product sold by 10% if it spent an additional $17,000 on advertising while leaving selling prices unchanged. What effect would this have on the department's net income or net loss? (Ignore income tax in your calculations.)
Use a negative sign to indicate a net loss answer; otherwise do not use negative signs with your answers.
Sales
Answer
Cost of goods sold
Answer
Gross profit
Answer
Direct expenses
Answer
Common expenses
Answer
Total expenses
Answer
Net income (loss)
Answer
Chapter 12 Solutions
HORNGREN COST ACCT NON-MAJORS W/ACCESS
Ch. 12 - Define strategy.Ch. 12 - Describe the five key forces to consider when...Ch. 12 - Prob. 12.3QCh. 12 - What is a customer preference map, and why is it...Ch. 12 - Prob. 12.5QCh. 12 - What are four key perspectives in the balanced...Ch. 12 - What are the five types of conditions to consider...Ch. 12 - Describe three features of a good balanced...Ch. 12 - What are three important pitfalls to avoid when...Ch. 12 - Describe three key components in doing a strategic...
Ch. 12 - Why might an analyst incorporate the...Ch. 12 - How does an engineered cost differ from a...Ch. 12 - What is downsizing?Ch. 12 - What is a partial-productivity measure?Ch. 12 - Prob. 12.15QCh. 12 - Jacobs Inc. is a relatively new company that has...Ch. 12 - The balanced scorecard describes all of the...Ch. 12 - Canarsie Corporation uses a balanced scorecard to...Ch. 12 - Balanced scorecard. Pineway Electric manufactures...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Strategy, balanced scorecard, merchandising...Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Strategy, balanced scorecard. Stanmore Corporation...Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Strategy, balanced scorecard, service company....Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Balanced scorecard and strategy. Scott Company...Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Balanced scorecard. Following is a random-order...Ch. 12 - Balanced scorecard. (R. Kaplan, adapted) Petrocal,...Ch. 12 - Balanced scorecard. Vic Corporation manufactures...Ch. 12 - Balanced scorecard, environmental, and social...Ch. 12 - Balanced scorecard, social performance. Comtex...Ch. 12 - Balanced scorecard, environmental, and social...Ch. 12 - Partial-productivity measurement. Gable Company...Ch. 12 - Total factor productivity (continuation of 12-43)....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Jamison examined monthly data for 2016 (not given in the case), and she detected an improving pattern during the year. Monthly sales were rising, costs were falling, and large losses in the early months had turned to a small profit by December. Thus, the annual data look somewhat worse than the final monthly data. Also, it appears to be taking longer for the advertising program to get the message out, for the new sales offices to generate sales, and for the new manufacturing facilities to operate efficiently. In other words, the lags between spending money and deriving benefits were longer than D’Leon’s managers had anticipated. For these reasons, Jamison and Campo see hope for the company—provided it can survive in the short run. Jamison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions should be taken. Your assignment is to help her answer the following questions. Provide clear explanations, not yes or no answers.…arrow_forwardBelow is a list of various metrics used to measure performance. For each metric, identify the correct balanced scorecard perspective with which the metric is associated. Metric Balanced Scorecard Perspective Average stock price Economic value added Employee turnover rates Manufacturing cycle time Market share Number of days from product launch to shelf Number of defects Number of new patent applications Percentage of repeat customers Percentage decrease in operating costs Percentage of sales generated by new products Research and development spending as a percentage of net revenues options: Customer Financial Internal Business Learning and Growtharrow_forwardForchen, Inc., provided the following information for two of its divisions for last year: Required: 1. For the Small Appliances Division, calculate: a. Average operating assets b. Margin c. Turnover d. Return on investment (ROI) 2. For the Cleaning Products Division, calculate: a. Average operating assets b. Margin c. Turnover d. Return on investment (ROI) 3. What if operating income for the Small Appliances Division was 2,000,000? How would that affect average operating assets? Margin? Turnover? ROI? Calculate any changed ratios (round to four significant digits).arrow_forward
- Merkley Company, a manufacturer of machine parts, implemented lean manufacturing at the end of 20X1. Three value streams were established: one for new product development and two order fulfillment value streams. One of the value streams set a goal to increase its ROS to 45% of sales by the end of the year. During the year, the value stream made significant improvements in several areas. The Box Scorecard below was prepared, with performance measures for the beginning of the year, midyear, and end of year. Although the members of the value stream were pleased with their progress, they were disappointed in the financial results. They were still far from the targeted ROS of 45%. They were also puzzled as to why the improvements made did not translate into significantly improved financial performance. Required: 1. From the scorecard, what was the focus of the value-stream team for the first 6 months? The second 6 months? What are the implications of these changes? 2. Using information from the scorecard, offer an explanation for why the financial results were not as good as expected.arrow_forwardAnalyzing Operational ChangesOperating results for department B of Delta Company during 2016 are as follows: Sales $530,000 Cost of goods sold 378,000 Gross profit 152,000 Direct expenses 120,000 Common expenses 66,000 Total expenses 186,000 Net loss $(34,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $40,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 15%, the effect on net income (loss) would be $Answer.arrow_forwardThe Hydride Division of Murdoch Corporation is an investment center. It has $1,000,000 of operating assets. During 2015, the Hydride Division earned operating income of $400,000 on $6,000,000 of sales. Murdoch's companywide return on investment or desired rate of return is approximately 10%. (Show work.) a. What is the ROI? b. What is the margin?arrow_forward
- Analyzing Operational ChangesOperating results for department B of Delta Company during 2016 are as follows: Sales $550,000 Cost of goods sold 378,000 Gross profit 172,000 Direct expenses 120,000 Common expenses 66,000 Total expenses 186,000 Net loss $(14,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $60,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 15%, the effect on net income (loss) would be $______arrow_forwardAnalysis of growth, price-recovery, and productivity components (continuation of 12-21 and 12-22). Refer to Exercise 12-21. Suppose that the market for silk-screened T-shirts grew by 10% during 2017. All increases in sales greater than 10% are the result of Gianni’s strategic actions.arrow_forwardAnalyzing Operational ChangesOperating results for department B of Shaw Company during 2016 are as follows: Sales $755,000 Cost of goods sold 480,000 Gross profit 275,000 Direct expenses 215,000 Common expenses 123,000 Total expenses 338,000 Net loss $(63,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 10% and making an additional advertising expenditure of $35,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 10%, the effect on net income (loss) would be $Answerarrow_forward
- In 2014, Apple reported profits of more than $50 billion on salesof $182 billion. For that same period, Microsoft posted a profitof almost $30 billion on sales of $88 billion. So Apple is a bettermarketer, right? Sales and profits provide information to compare the profitability of these two competitors, but between thesenumbers is information regarding the efficiency of marketingefforts in creating those sales and profits. Answer the questions using the following information from the two companies’ incomes statements (all numbers are in thousands): Apple MicrosoftSales $182,795,000 $86,833,000Gross Profit $70,537,000 $59,899,000Marketing Expenses $8,994,750 $15,474,000Net Income (Profit) $52,503,000 $27,759,000 Calculate profit margin, net marketing contribution,marketing return on sales (or…arrow_forwardReturn on Investment (ROI) Analysis The contribution formal income statement for Huerra Company for last year is given below: The company had average operating assets of $2,000,000 during the year. Required: 1. Compute the company’s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (l) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $400,000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $32,000 per year by using less costly materials. 4. The company issues bonds and uses the proceeds to purchase machinery and equipment that…arrow_forwardThe marketing department of Metroline Manufacturing estimates that its sales in 2016 will be $1.68 million. Interest expense is expected to remain unchanged at $35,000, and the firm plans to pay $66,000 in cash dividends during 2016. Metroline Manufacturing's income statement for the year ended December 31, 2015, is given along with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components. a. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2016. b. Use fixed and variable cost data to develop a pro forma income statement for the year ended December 31, 2016. c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of 2016 income? Explain why.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License