Question

Managerial Decision Making Model Short Answer Something's wrong! Generator X Company produces two generators. The Excel has been manufactured for more than 20 years and it sells for $900. The Power is a new model developed and marketed approximately two years ago. It sells for $1,140. Based on the information in the company's income statement for 2020, upper management wants to downscale the spend available marketing dollars on the Power while beginning to phase out the production of the Excel. Generator X Company Income Statement For the year ended December 31, 2020 Power Excel Total Sales $4,560,000 $19,800,000 $24,360,000 Cost of Goods Sold 3192000 12540000 15732000 Gross Profit 1368000 7260000 8628000 Selling & Administrative expenses $978,000 $5,830,000 $6,808,000 Net Income 390000 1430000 1820000 Units Produced and sold 4000 22000 Net Income per unit sold $97.5 $65 The standard Unit Costs of the Power and Excel Generators Power Excel Direct Material $584 $208 Direct Labor Power ($3.5 hr * $12) 42 Excel ($1.5 hr * $12) 18 Machine Usage Power (4 hr * $18) 72 Excel (8 hr * $18) 144 Manufacturing Overhead* 100 200 Total Standard Cost $798 $570 *Manufacturing overhead was applied on the basis of the machine hours at the predetermined rate of $25 per hour. Note: We have learned that direct costs inlcude direct materials and direct labor. For our purposes in this problem, you should also assume that Machine usage is a direct cost. Wait a minute!...before we do anything rash: Generator X's controller (Western New England MSA graduate) wants to try one more thing. She instructs her accountants to gather relative information so that her department may try allocating manufacturing overhead using activity-based costing and activity-based management. The following info was gathered: Activity Center Cost Driver Traceable Cost Number of Events / Activities Power Excel Total Soldering # of solder joints $942,000 385000 1185000 1570000 Shipments # of shipments 860000 3800 16200 20000 Quality control # of inspections 1240000 21300 56200 77500 Purchase Orders # of orders 950400 109980 80100 190080 Machine Power machine hours 57600 16000 176000 192000 machine setups # of setups 750000 14000 16000 30000 Total traceable costs $4,800,000 You will write a summary memo, that includes an executive summary, and responds individually to the following questions: Note: use excel as appropriate and show the tables in your responses. Question Point Value 1. What is the problem to be solved? 2. Identify the relevant information needed to solve this problem 3. List the necessary steps to solve this problem. 4. What are the alternative methods commonly utilized to allocate manufacturing overhead costs to product? How are they different? Which method might be better in this situation? 5. Using excel, recalculate the cost of these products. Using excel, recalculate the profit for each of these products. Present the calculations in the Income Statement format initially shown. Show calculations in total as well as on a per unit basis. Should Generator X Company stop product of the Excel Generator? Justify/explain your decision. Remember, you will write a summary memo, that includes an executive summary, and responds individually to the questions listed above.

Answer 1

as per our companies answering policy, we can answer only 4 sub-questions at a time. I'm providing you the answers for the most relevant 4 i.e (1,2,3,5) questions; kindly refer to the answering policy; thanks!