Assn. #4-Solutions

Assn. #4-Solutions - ACCT3334 Cost Management: Systems...

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ACCT3334 – Cost Management: Systems Evaluation Fall 2010 Assignment #4 Due: November 15, 2010 @ 4:00 pm Student Drop Box #I-4 For this assignment you are expected to work on your own. Part I (60%) Problems 16-23, 13-23 and 13-24 of your textbook, Cost Accounting: A Managerial Emphasis, 5 th Canadian edition, by Horngren, Foster, Datar and Gowing. Part II (40%) New Look Jacket Inc. produces and sells two lines of jackets: nylon and leather. The market for nylon jackets is large and competitive, but the leather jacket market has traditionally been small with only a few competing manufacturers. The jackets are considered substitutes for one another. The operating budget for NLJ for the year 20x7 was as follows: Nylon Leather Jackets Jackets Total Sales volume 95,000 5,000 100,000 Sales revenue $3,325,000 $750,000 $4,075,000 Total variable costs 2,161,250 517,500 2,678,750 Contribution margin $1,163,750 $232,500 $1,396,250
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The actual results for the year 20x7 are as follows: Nylon Leather Jackets Jackets Total Sales volume 93,500 16,500 110,000 Sales revenue $3,366,000 $2,442,000 $5,808,000 Total variable costs 2,127,125 1,707,750 3,834,875 Contribution margin $1,238,875 $ 734,250 $1,973,125 Additional information is as follows: Nylon Jackets Leather Jackets Market size (units): 20x7 budget 475,000 12,500 20x7 actual 425,000 125,000 Required - Calculate all relevant revenue variances and comment on the performance of the marketing department.
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16-23 (20 - 25 min.)  Customer profitability, distribution. 1. The activity-based costing for each customer is: Charlesville Pharmacy Chapelville Pharmacy 1. Order processing, $40 × 13; $40 × 10 $ 520 $ 400 2. Line-item ordering, $3 × (13 × 9; 10 × 18) 351 540 3. Store deliveries, $50 × 7; $50 ×10 350 500 4. Carton deliveries, $1 × (7 × 22; 10 × 20) 154 200 5. Shelf-stocking, $16 × (7 × 0; 10 × 0.5) 0 80 Operating costs $1,375 $1,720 The operating income of each customer is: Charlesville Pharmacy Chapelville Pharmacy Revenues, $2,400 × 7; $1,800 × 10 $16,800 $18,000 Cost of goods sold, $2,100 × 7; $1,650 × 10 14,700 16,500 Gross margin 2,100 1,500 Operating costs 1,375 1,720 Operating income $ 725 $ (220 ) Chapelville Pharmacy has a lower gross margin percentage than Charlesville (8.33% vs.  12.50%) and consumes more resources to obtain this lower margin.  2. Ways Figure Four could use this information include: a. Pay increased attention to the top 20% of the customers. This could entail asking them  for ways to improve service. Alternatively, you may want to highlight to your own  personnel the importance of these customers; e.g., it could entail stressing to delivery  people the importance of never missing delivery dates for these customers. b.
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Assn. #4-Solutions - ACCT3334 Cost Management: Systems...

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