Practice Problems 5 - Chapter 14 14-21 1. Revenues...

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Chapter 14 14-21 Customer profitability, service company. 1. Avery Okie Wizard Grainger Duran Revenues $260,000 $200,000 $322,000 $122,000 $212,000 Technician and equipment cost 182,000 175,000 225,000 107,000 178,000 Gross margin 78,000 25,000 97,000 15,000 34,000 Service call handling ($75 × 150; 240; 40; 120; 180) 11,250 18,000 3,000 9,000 13,500 Web-based parts ordering ($80 × 120; 210; 60; 150; 150) 9,600 16,800 4,800 12,000 12,000 Billing/Collection ($50 × 30; 90; 90; 60; 120) 1,500 4,500 4,500 3,000 6,000 Database maintenance ($10 × 150; 240; 40; 120; 180) 1,500 2,400 400 1,200 1,800 Customer-level operating income $ 54,150 $ (16,700) $ 84,300 $(10,200) $ 700 2. Customers Ranked on Customer-Level Operating Income Cumulative Customer-Level Operating Income Customer-Level Customer-Level Cumulative as a % of Total Operating Customer Operating Income Customer-Level Customer-Level Customer Income Revenue as a % of Revenue Operating Income Operating Income Code (1) (2) (3) = (1) ÷ (2) (4) (5) = (4) ÷ $112,250 Wizard $ 84,300 $ 322,000 26.18% $84,300 75% Avery 54,150 260,000 20.83% 138,450 123% Duran 700 212,000 0.33% 139,150 124% Grainger (10,200) 122,000 -8.36% 128,950 115% Okie (16,700) 200,000 -8.35% 112,250 100% $112,250 $1,116,000 14-34 Variance analysis, multiple products. 1, 2, and 3. Solution Exhibit 14-34 presents the sales-volume, sales-quantity, and sales- mix variances for each type of cookie and in total for Debbie’s Delight, Inc., in August 2009. The sales-volume variances can also be computed as Sales-volume variance = ( 29 Actual quantity Budgeted quantity of pounds sold of pounds sold - × Budgeted contribution margin per pound
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The sales-volume variances are Chocolate chip = (57,600 – 45,000) × $2.00 = $25,200 F Oatmeal raisin = (18,000 – 25,000) × $2.30 = 16,100 U Coconut = (9,600 – 10,000) × $2.60 = 1,040 U White chocolate = (13,200 – 5,000) × $3.00 = 24,600 F Macadamia nut = (21,600 – 15,000) × $3.10 = 20,460 F All cookies $53,120 F The sales-quantity variance can also be computed as Sales-volume variance Actual pounds Budgeted pounds of all cookies of all cookies sold sold -    ×   Budgeted sales-mix percentage   × Budgeted contribution margin per pound The sales-quantity variances are Chocolate chip = (120,000 – 100,000) × 0.45 × $2.00 = $18,000 F Oatmeal raisin = (120,000 – 100,000) × 0.25 × $2.30 = 11,500 F Coconut = (120,000 – 100,000) × 0.10 × $2.60 = 5,200 F White chocolate = (120,000 – 100,000) × 0.05 × $3.00 = 3,000 F Macadamia nut = (120,000 – 100,000) × 0.15 × $3.10 = 9,300 F All cookies $47,000 F The sales-mix variance can also be computed as: Sales-quantity variance = ( 29 Actual sales- Budgeted sales- mix percentage mix percentage - × Actual pounds of all cookies sold × Budgeted contribution margin per pound The sales-mix variances are: Chocolate chip = (0.48 – 0.45) × 120,000 × $2.00 = $ 7,200 F Oatmeal raisin = (0.15 – 0.25)
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This note was uploaded on 10/26/2009 for the course ACTP 5004 taught by Professor Montesarchio during the Summer '08 term at Nova Southeastern University.

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Practice Problems 5 - Chapter 14 14-21 1. Revenues...

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