Question
In: Accounting
ABC Inc. producing A, B and C products, the following are costs and revenues information regarding...
ABC Inc. producing A, B and C products, the following are costs and revenues information regarding these products during 2010:
|
Data |
A |
B |
C |
Total |
|
Revenues |
200,000 |
300,000 |
150,000 |
650,000 |
|
Costs: |
||||
|
DM |
80,000 |
160,000 |
60,000 |
300,000 |
|
DL |
30,000 |
60,000 |
20,000 |
110,000 |
|
VOH |
15,000 |
25,000 |
10,000 |
50,000 |
|
FOH (department- specific) |
20,000 |
35,000 |
15,000 |
70,000 |
|
FOH (factory-general) |
10,000 |
10,000 |
10,000 |
30,000 |
|
Operating expenses (Fixed) |
20,000 |
20,000 |
20,000 |
60,000 |
|
Operating income |
25,000 |
(10,000) |
15,000 |
30,000 |
Required:
1. Based on the above information, do advice the company to close department (B) assuming that in case of closing the department all department specific cost will be eliminated.
2. If the company closed department (B) and expand its operations in department (C), which entails increasing the revenues and costs by 40% and 80% of the fixed OH department specific cost moved to department (C), would you advise the company to do so?
Solutions
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ABC Company sells Product A, Product B, and Product C. Data
regarding these products are presented below
Products
Selling price per unit
Variable cost per unit
Sales mix
A
120
80
4
B
200
150
3
C
90
40
3
Fixed Cost
1,150,000
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Fixed Cost $321,000
Product A Product B Product C
Price Per Unit $40 $34 $20
Variable Cost Per Unit $25 $20 $6
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ABC Limited makes three products; A, B and C. Details of product direct costs and volumes...
ABC Limited makes three products; A, B and C. Details of product
direct costs and volumes for the period are as follows:
Product
A
B
C
Direct material cost per unit
£5.00
£4.50
£12.50
Direct labour cost per unit
£9.00
£18.00
£27.00
Labour hours per unit
1 hours
2 hours
3 hours
Machine hours per unit
3 hours
6 hours
9 hours
Production volumes for period
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750
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2. Haliburton, Inc. reported the following financial information
for 2013: Revenues $100 million Costs & Expenses (excl
Depreciation) $ 80 million Depreciation $ 5 million Taxes $ 6
million Net Income $ 9 million Fixed Assets (gross) $100 million
Working Capital $ 40 million The firm expects revenues, costs,
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THE Company produces three products, A, B, and C. The following information relates to THE Company...
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The following information relates to THE Company
and its three products for June:
THE Company:
Sales revenue .............. $700,000
Segment margin ............. $204,000
Net income ................. $169,000
Product A:
Sales revenue .............. $200,000
Contribution margin ........ $104,000
Segment margin ............. $ 19,000
Product B:
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A
B
C
Total
Units Sold
2,500
4,000
1,500
8,000
Price (after addt'l processing)
$
35
$
22
$
15
Separable Processing cost
$
35,000
$
12,000
$
16,000
$
63,000
Units Produced
2,500
4,000
1,500
8,000
Total Joint Cost
$
120,000
Sales Price at Split-off
$
25
$
12
$...
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If Processed Further
Product
Units
Produced
Sales Value at Split-Off
Sales Value
Additional Costs
A
6,000
$
40,000
$
55,000
$
4,000
B
4,000
35,000
45,000
6,000
C
2,000
25,000
12,000
$
100,000
$
100,000
$
10,000
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maintenance and repair cost.
Month
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Revenues ($000)
July
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August
3.28
53.00
September
2.80
49.00
October
2.21
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revenues for the last two years is available from the accounting
records at Arnie’s Arcade & Video Palace. Arnie has asked you
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Month
Maintenance and Repair Cost ($000)
Revenues ($000)
July
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2.83
44.00
September
2.35
40.00
October
1.76
56.00
November
1.85
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0.69
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January
2.67
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February
2.71
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