Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Managerial Accounting Expert

Accounting


Home >> Managerial Accounting

Adm2341 manufactures and sells four different products. The following data are extracted from the most recent financial statements:

 

Products

 

A

B

C

D

Sales

Cost of goods sold

   Direct materials

   Direct labour

   Manufacturing overhead

S&A expenses

Operating income

$2,500,000

 

300,000

500,000

     600,000

 300,000

800,000

$2,000,000

 

400,000

600,000

     800,000

300,000

(100,000)

$1,500,000

 

200,000

400,000

     900,000

150,000

(150,000)

$   4,000,000

 

900,000

1,600,000

  300,000

 500,000

700,000

For each product, 50% of manufacturing overhead is variable costs and variable S&A expenses are equal to 10% of sales. The remaining portion includes traceable and common fixed costs.

The company is considering disposing of the Product C since it has been consistently unprofitable for a number of years. Admw2341's Management team approached you for help and advice on this matter.
 
REQUIRED

1) Prepare an income statement showing the appropriate performance of each product.

2) Adm2341's Top management asked you to provide them with a "decision rule" they could apply regarding Product C. Identify any additional information needed to implement your "decision rule".

3) To rationalise your decision on Product C, you have collected the following data:

 a) If product C is eliminated, Product D annual sales will increase by $10%. The Variable cost structure and S&A fixed expenses will be unchanged.

 b) If Product C is eliminated, Product A annual sales will drop by 10 %. The  Variable cost structure and S&A fixed expenses will be unchanged.

 c) If Product C is dropped, the management of the company feels it can save annually a total of $200,000 of fixed manufacturing overhead and S&A expenses.

Do you recommend to Adm2341's Management to drop Product C? Why ?

Managerial Accounting, Accounting

  • Category:- Managerial Accounting
  • Reference No.:- M9528143

Have any Question?


Related Questions in Managerial Accounting

Corporate accounting assignment -assessment task - select

Corporate Accounting Assignment - Assessment task - Select two public limited companies listed on the Australian Securities Exchange (ASX) that are in the same industry. Go to the website of your selected companies. Then ...

Management accounting with a strategic perspective

MANAGEMENT ACCOUNTING with a STRATEGIC PERSPECTIVE Assignment - This Assignment is designed to give students an opportunity to: 1. Integrate traditional, contemporary and advanced theoretical and technical management acc ...

Managerial accounting group report performance measures

Managerial Accounting Group Report: Performance measures, remuneration and motivation Learning Outcomes - a) Analyse the roles of cost and management in organisations through the analysis of accounting concepts and tools ...

Duncan arrowroot confectionery dacrequired in hard copy no

Duncan Arrowroot Confectionery (DAC) Required in hard copy no later than the class scheduled time on Thursday, October 18th. 1) Prepare a memo to the Controller explaining how you would go about classifying the various r ...

Corporate accounting assignment -objectives -the

Corporate Accounting Assignment - Objectives - The educational objective of this task is to develop student capabilities to read, interpret and analyse financial statements; to apply international accounting standards; t ...

You need to prepare a paper about lacroix companycompany

You need to prepare a paper about Lacroix company Company: Lacroix Home Work: History & background Page: 1 and half

Managerial accounting assignment -background you have been

Managerial Accounting Assignment - Background: You have been hired by the Board of Directors of your chosen company (ASX Listed) to explain how ABC model can improve the management accounting information available to its ...

Management accounting assessment - research amp analysis

Management Accounting Assessment - Research & Analysis Teamwork Assessment Description - Learning Outcome - Analyse the issues or problems (in a given scenario) using management accounting techniques and tools, and formu ...

Corporate accounting assignment -assessment task - select

Corporate Accounting Assignment - Assessment task - Select two public limited companies listed on the Australian Securities Exchange (ASX) that are in the same industry. Go to the website of your selected companies. Then ...

Assume you have been hired as a consultant to prepare a

Assume you have been hired as a consultant to prepare a balanced scorecard that will be presented to top management. You will choose a company to research and will provide a professional report that will include the foll ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved