Questions
6) Based on your findings for a-d above, create the ACTUAL 2018 Income Statement for BRBC...

6) Based on your findings for a-d above, create the ACTUAL 2018 Income Statement for BRBC using your recommendations.


I need help with the questions 5 and 6

Built Right Bike Company (BRBC) is an established manufacturer of quality bicycles. They manufacture three styles of bicycles.

Bicycle A is a popular racing bicycle primarily sold to dealers in the bicycle racing circuit. Their material is lightweight and durable with detachable joints for easy disassembly and storage. This market has been declining over the past couple years.

Bicycle B is a sturdy leisure bike typically sold to resorts for use by vacationers. This market is stable with regular replacement bikes ordered as well as new resorts and hotel expansions.

Bicycle C is the usual bicycle used by families and children and is the primary bicycle sold by the company outlet store Buy-Right Bike Shop (BRBS).

Budgeted financial Information is provided below.

Operating Budget

Standard costs

           Bicycle A

Bicycle B

Bicycle C

Notes

Volume in units

                80,000

       120,000

      200,000

Per unit:

Sales price

$                   150

$           110

$             80

Direct costs:

   Materials

17

10

7

directly related to production volume

   Labor

21

16

4

directly related to production volume

Subtotal

$                     38

$             26

$             11

Indirect costs:

   Supplies

7

2

1

directly related to production volume

   Labor

10

8

4

1/2 varies with direct labor; the rest is fixed

   Supervision

8

3

1

unrelated to production volume

   Energy

12

6

4

1/2 varies with direct labor; the rest is fixed

   Depreciation

22

7

5

unrelated to production volume

   Head office support

12

6

3

corporate office allocation*

   All other

11

2

1

unrelated to production volume

Subtotal

82

34

19

Total product cost

$                   120

$             60

$             30

Product-line profitability

$                     30

$             50

$             50

* This category comprises accounting, IT, H/R, legal, and others supporting the production of this bicycles.

Allocations were made using multiple drivers. Corporate office budgets are unrelated to production levels.

Instructions:

Add two new sheets to your Excel workbook: one for BRBC calculations and one for BRBC Income Statement.

1) Compare using process costing, job costing, or activity-based costing to determine the best costing for BRBC.

2) Calculate the profitability of each product line if the volume increases by 10% each.

3) Calculate the profitability of each product line if the volume decreases by 10% each.

4) Explain the results of 1 & 2 above.

5) Based on this information determine the answers to the following:

a) Should BRBC stop making bicycle A? What is the impact of dropping Bike A from the line of products? Assume the other two product lines will not change in volumes or selling prices.

b) Should the price of Bike C be lowered? Consider the volume sold to sister company BRBS at only $52 per bike, which is eliminated when the corporation financial statements are consolidated. What happens if the price to all others is reduced to $75, and an additional 20,000 bikes were sold at this lower price (not counting the intercompany BRBS sales)

c) Should the company change its advertising focus? What would be the impact of increasing Bike C's volume and decrease in Bike A's volume by 10,000 units each? Disregard units sold to sister company BRBS.

d) Should the price of Bike C be lowered with the change to advertising focus? What is the impact if we lower the price of Bike C to $75 and shift advertising focus more to Bike C, potentially decreasing Bike A volume by 10,000 bikes and increasing Bike C volume by 30,000 bikes.

6) Based on your findings for a-d above, create the ACTUAL 2018 Income Statement for BRBC using your recommendations.

Activity based costing
Bicycle A Bicycle B Bicycle C
Sales Price 150 110 80
Variable cost (56) (35) (16)
Profit 94 75 64
Ranked 1 2 3

Calculating Variable cost
Direct cost Bicycle A Bicycle B Bicycle C
Materials 17 10 7
Labor 21 16 4
Indirect cost
Suppliers 7 2 1
Labor (half is variable) 5 4 2
Energy 6 3 2
Total 56 35

16
Profitability of product line when volume increases by 10%
Bicycle A Bicycle B Bicycle C
Sale Volume in Units 88,000 132,000 220,000
Sales price 150 110 80
Sales (Total) 13,200,000 14,520,000 17,600,000
Direct Cost (3,344,000) (3,432,000) (2,420,000)
Indirect cost:
Supplies (616,000) (264,000) (220,000)
Labor: Variable (440,000) (528,000) (440,000)
Labor: fixed (400,000) (480,000) (400,000)
Supervision (640,000) (360,000) (200,000)
Energy: Variable (528,000) (432,000) (480,000)
Energy:fixed (480,000) (360,000) (400,000)
Depreciation (1,760,000) (840,000) (1,000,000)
Head office (960,000) (720,000) (600,000)
Other cost (880,000) (240,000) (200,000)
Total cost (10,048,000) (7,656,000) (6,360,000)
Total profit 3,152,000 6,864,000 (11,240,000)

Profitability of product line when volume decreases by 10%
Bicycle A Bicycle B Bicycle C
Sale Volume in Units 72,000 108,000 180,000
Sales price 150 110 80
Sales (Total) 10,800,000 11,880,000 14,400,000
Direct Cost (2,736,000) (2,808,000) (1,980,000)
Indirect cost:
Supplies (504,000) (216,000) (180,000)
Labor: Variable (360,000) (432,000) (360,000)
Labor: fixed (400,000) (480,000) (400,000
Supervision (640,000) (360,000) (200,000)
Energy: Variable (432,000) (324,000) (360,000)
Energy:fixed (480,000) (360,000) (400,000)
Depreciation (1,760,000) (840,000) (1,000,000)
Head office (960,000) (720,000) (600,000)
Other cost (880,000) (240,000) (200,000)
Total cost (9,152,000) (6,780,000) (5,680,000)
Total profit 1,648,000 5,100,000 8,720,000



In: Finance

Which of the following is true? Select one: a. The average variable cost curve intersects the...

Which of the following is true?

Select one:

a. The average variable cost curve intersects the marginal cost curve at the latter's minimum.

b. The marginal cost curve intersects the average total cost curve at the latter's minimum.

c. The marginal cost curve intersects the average fixed cost curve at the latter's minimum.

d. The average fixed cost curve graphs as a horizontal straight line.

e. The average fixed cost curve intersects the average variable and average total cost curves at their minimums.

In: Economics

Cost Behavior Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the...

Cost Behavior

Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow.


Units
Produced		 Total
Lumber
Cost		 Total
Utilities
Cost		 Total Machine
Depreciation
Cost
5,000 shelves $60,000    $7,250    $145,000   
10,000 shelves 120,000    13,000    145,000   
20,000 shelves 240,000    24,500    145,000   
25,000 shelves 300,000    30,250    145,000   

1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.

Lumber Variable Cost
Utilities Mixed Cost
Depreciation Fixed Cost

2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N = Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places.


Cost		 Fixed Portion
of Cost		 Variable Portion
of Cost (per Unit)
Lumber $fill in the blank $fill in the blank
Utilities fill in the blank fill in the blank
Depreciation fill in the blank fill in the blank

In: Accounting

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes...

Riverside Inc. makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold
505 655 805
Total costs
Variable costs $ 66,660 ? ?
Fixed costs 148,400 ? ?
Total costs $ 215,060 ? ?
Cost per unit
Variable cost per unit ? ? ?
Fixed cost per unit ? ? ?
Total cost per unit ? ? ?


Required:
1. Complete the table. (Round your cost per unit answers to 2 decimal places.)   

Number of Canoes Produced and Sold 505 655 805
Total Costs
Variable Costs $66,660
Fixed Costs 148,400
Total Costs $215,060 $0 $0
Cost per Unit
Variable Cost per Unit
Fixed Cost per Unit
Total Cost per Unit $0.00 $0.00 $0.00


3. Suppose Riverside sells its canoes for $512 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your contribution margin to the nearest whole dollar and your contribution margin ratio to the nearest whole percent.)

Unit Contribution Margin
Contribution Margin Ratio %

4. Next year Riverside expects to sell 855 canoes. Complete the contribution margin income statement for the company.

RIVERSIDE INC.
Contribution Margin Income Statement
For the Next Year
Contribution Margin
Net Operating Income

In: Accounting

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes...

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes Produced and Sold 500 650 800 Total costs Variable costs $ 66,500 ? ? Fixed costs 148,500 ? ? Total costs $ 215,000 ? ? Cost per unit Variable cost per unit ? ? ? Fixed cost per unit ? ? ? Total cost per unit ? ? ? Required: 1. Complete the table. (Round your cost per unit answers to 2 decimal places.)

Number of Canoes Produced and Sold 500 650 800
Total Costs
Variable Costs $66,500
Fixed Costs 148,500
Total Costs $215,000 $0 $0
Cost per Unit
Variable Cost per Unit
Fixed Cost per Unit
Total Cost per Unit $0.00 $0.00 $0.00


3. Suppose Riverside sells its canoes for $503 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your contribution margin to the nearest whole dollar and your contribution margin ratio to the nearest whole percent.)

Unit Contribution Margin
Contribution Margin Ratio %

4. Next year Riverside expects to sell 850 canoes. Complete the contribution margin income statement for the company. With discription

RIVERSIDE INC.
Contribution Margin Income Statement
For the Next Year
Contribution Margin
Net Operating Income

In: Accounting

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes...

Riverside Inc. makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold
455 605 755
Total costs
Variable costs $ 66,885 ? ?
Fixed costs 149,800 ? ?
Total costs $ 216,685 ? ?
Cost per unit
Variable cost per unit ? ? ?
Fixed cost per unit ? ? ?
Total cost per unit ? ? ?


Required:
1. Complete the table. (Round your cost per unit answers to 2 decimal places.)   

Number of Canoes Produced and Sold 455 605 755
Total Costs
Variable Costs $66,885   
Fixed Costs 149,800
Total Costs $216,685
Cost per Unit
Variable Cost per Unit
Fixed Cost per Unit
Total Cost per Unit




3. Suppose Riverside sells its canoes for $504 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your contribution margin to the nearest whole dollar and your contribution margin ratio to the nearest whole percent.)

  
Unit Contribution Margin
Contribution Margin Ratio %



4. Next year Riverside expects to sell 805 canoes. Complete the contribution margin income statement for the company.

RIVERSIDE INC.

Contribution Margin Income Statement

For the Next Year
Contribution Margin
Net Operating Income

In: Accounting

The following information shows last year’s quality-related costs for the Madrigal Company: Quality engineering $600,000 Inspection...

The following information shows last year’s quality-related costs for the Madrigal Company:

Quality engineering

$600,000

Inspection of and testing of incoming materials

480,000

Warranty claims

2,814,000

Repair costs in the field

1,020,000

Product liability lawsuits

5,400,000

Statistical process control

300,000

Research of customer needs

90,000

Product recalls

2,400,000

Maintenance of test equipment

420,000

Waste

840,000

Returned products

1,440,000

Net cost of scrap

762,000

Rework costs

1,440,000

Product quality audits

570,000

Quality training

150,000

Downtime due to defects

150,000

Process control monitoring

1,200,000

Supplier certification

108,000

Total sales for the year were $120,000,000.

Prepare a cost-of-quality report grouping costs into prevention, appraisal, internal failure and external failure.  Show each cost in total and as a percentage of sales.

Type of Cost

Annual Cost

Percent of Sales

Prevention Costs

Total

Appraisal Costs

Total

Internal Failure Costs

Total

External Failure Costs

Total

Total Quality Costs

In: Accounting

Felix & Co. reports the following information about its unit sales and cost of sales. Period...

Felix & Co. reports the following information about its unit sales and cost of sales.

Period Units Sold Cost of Sales Period Units Sold Cost of Sales
1 0 $ 2,640 6 2,140 $ 6,492
2 540 3,612 7 2,540 7,212
3 940 4,332 8 2,940 7,932
4 1,340 5,052 9 3,340 8,652
5 1,740 5,772 10 3,740 9,372


Hint: (Draw an estimated line of cost behavior using a scatter diagram offline.)


Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method.

Felix & Co. reports the following information about its unit sales and cost of sales.

Period Units Sold Cost of Sales Period Units Sold Cost of Sales
1 0 $ 2,640 6 2,140 $ 6,492
2 540 3,612 7 2,540 7,212
3 940 4,332 8 2,940 7,932
4 1,340 5,052 9 3,340 8,652
5 1,740 5,772 10 3,740 9,372


Hint: (Draw an estimated line of cost behavior using a scatter diagram offline.)


Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method.

High-Low method - Calculation of variable cost per unit
0
High-Low method - Calculation of fixed costs
Total cost at the high point
Variable costs at the high point:
Volume at the high point:
Variable cost per unit
Total variable costs at the high point
Total fixed costs
Total cost at the low point
Variable costs at the low point:
Volume at the low point:
Variable cost per unit
Total variable costs at the low point
Total fixed costs

In: Accounting

Kubin Company’s relevant range of production is 25,000 to 33,500 units. When it produces and sells...

Kubin Company’s relevant range of production is 25,000 to 33,500 units. When it produces and sells 29,250 units, its average costs per unit are as follows:

  

Average Cost per Unit
Direct materials $ 8.50
Direct labor $ 5.50
Variable manufacturing overhead $ 3.00
Fixed manufacturing overhead $ 6.50
Fixed selling expense $ 5.00
Fixed administrative expense $ 4.00
Sales commissions $ 2.50
Variable administrative expense $ 2.00

Required:

2. Assume the cost object is the Manufacturing Department and that its total output is 29,250 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department?

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

2. Assume the cost object is the Manufacturing Department and that its total output is 29,250 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department? (Round per unit values to 2 decimal places.)

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

Show less
2a. Direct materials per unit $8.50
Direct labor per unit 5.50
Variable manufacturing overhead per unit 3.00
Fixed manufacturing overhead per unit 6.50
Total manufacturing cost per unit $23.50
Number of units sold 29,250
Total direct costs $687,375
2b. Total indirect costs

3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $117,000 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation.

a. When the company sells 29,250 units, what is the total direct selling expense that can be readily traced to individual sales representatives?

b. When the company sells 29,250 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $117,000 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation.

a. When the company sells 29,250 units, what is the total direct selling expense that can be readily traced to individual sales representatives? (Round per unit value to 2 decimal places.)

b. When the company sells 29,250 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

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3a. Sales commissions per unit
Number of units sold
Total sales commission
Fixed portion of sales representatives’ compensation
Total direct selling expense
3b. The total indirect selling expense

In: Accounting

1. Assume that if a firm uses one more unit of one input it will have...

1. Assume that if a firm uses one more unit of one input it will have diminishing marginal returns. If the firm uses one more unit of that one input its total output will decrease. (True or False)

2. When a firm produces 200 units of output its average fixed cost is $200. if its average total cost at this output is $500, what is the firm’s average variable cost at this output?

$700

$300

$3.00

None of the answers shown is correct.

More information is needed to answer this question.

3. identify the correct observations of cost curves in the following list. There is more than one answer to this question. You must mark all of the correct answers to receive full credit.

The marginal cost curve passes through the minimum points of the average variable cost and average total cost curves.

Average total cost continually decreases as output increases.

When marginal cost is below average total cost, average total cost decreases.

The average variable cost curve lies below the average total cost curve.

Total variable cost continually increases as output increases.

4. Oil is used in the production of gasoline. Recently, Russia and Saudi Arabia have substantially increased oil production causing the cost of oil to decrease substantially. Simultaneously, due to the Covid-19 pandemic many people are working from home. Based on this information, what would you expect to happen to the price of gasoline?

It will remain the same.

It will increase.

It will decrease.

More information is needed to answer this question.

5. Suppose that the cost to hire a worker for one more hour is $15. The addition to output from hiring the worker for one more hour would be 5 units. The output produced can be sold for $4/unit. Which of the following statements is correct?

The firm should hire the worker for one more hour because MRP > wage rate.

The firm should hire the worker for one more hour because the total output would increase.

The firm should hire the worker for one more hour because the marginal product is positive.

The firm should not hire the worker for one more hour because MRP < wage rate.

The firm should hire the worker for one more hour because it has increasing marginal returns.

In: Economics