Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 7, Problem 11CE
Refer to Cornerstone Exercise 7.10. (Round percentages to four significant digits and cost allocations to the nearest dollar.)
Required:
- 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze.
- 2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method.
- 3. What if it cost $2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to these three products?
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Assume the following (1) selling price per unit = $25, (2) variable expense per unit = $13, (3) unit sales = 2,640, and (4) total fixed expenses = $25,000. Given these four assumptions, net operating income must be:
Multiple Choice
$9,320.
$6,680.
$41,000.
$27,640.
1. Calculate the contribution margin rate, the sales dollar breakeven point, and the unit sales breakeven
point.
2. Use the following information to perform your calculations.
a. Net Sales: $50,000.00
b. Contribution Margin: $20,000.00
c. Total Fixed Costs: $15,500.00
d. Unit Sales Price: $25.00
3. Provide the formula and write out the equation that you use for each calculation.
a. Contribution Margin Rate:
b. Sales Dollar Breakeven Point:
C. Unit Sales Breakeven Point:
Spectrum Corp. makes two products: C and D. The following data have been summarized:
(Click the icon to view the data.)
Spectrum Corp. desires a 27% target gross profit after covering all product costs. Considering the total product costs assigned to the Products C and D, what would Spectrum have to charge the customer to achieve that gross profit? Round to two decimal places.
Begin by selecting the formula to compute the amount that the company should charge for each product.
Total product cost per unit
Spectrum should charge 2091.10 for Product C.
Data table
Direct materials cost per unit
Direct labor cost per unit
Indirect manufacturing cost per unit
Total costs assigned
Print
Product cost as a percentage of sales price
Product C
$
900.00 $
400.00
226.50
$ 1,526.50 $
Done
Product D
2,400.00
100.00
531.00
3,031.00
X
=
Required sales
price per unit
G
Chapter 7 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 7 - Describe the two-stage allocation process for...Ch. 7 - Why must support service costs be assigned to...Ch. 7 - Explain how allocation of support service costs is...Ch. 7 - Prob. 4DQCh. 7 - Explain how allocating support service costs will...Ch. 7 - Prob. 6DQCh. 7 - Explain why it is better to allocate budgeted...Ch. 7 - Why is it desirable to allocate variable costs and...Ch. 7 - Explain why either normal or peak capacity of the...Ch. 7 - Explain why variable bases should not be used to...
Ch. 7 - Prob. 11DQCh. 7 - Explain the difference between the direct method...Ch. 7 - The reciprocal method of allocation is more...Ch. 7 - What is a joint cost? How does it relate to...Ch. 7 - How do joint costs differ from other common costs?Ch. 7 - The expected costs for the Maintenance Department...Ch. 7 - Prob. 2CECh. 7 - Valron Company has two support departments, Human...Ch. 7 - Refer to Cornerstone Exercise 7.3. Now assume that...Ch. 7 - Refer to Cornerstone Exercise 7.3. Now assume that...Ch. 7 - Refer to Cornerstone Exercise 7.3 and solve for...Ch. 7 - Orchard Fresh, Inc., purchases apples from local...Ch. 7 - Refer to Cornerstone Exercise 7.7. Assume that...Ch. 7 - Refer to Cornerstone Exercise 7.7. Assume that...Ch. 7 - A company manufactures three products, L-Ten,...Ch. 7 - Refer to Cornerstone Exercise 7.10. (Round...Ch. 7 - Classify each of the following departments in a...Ch. 7 - Prob. 13ECh. 7 - Identify some possible causal factors for the...Ch. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Kumar, Inc., evaluates managers of producing...Ch. 7 - Refer to the data in Exercise 7.18. When the...Ch. 7 - Jasmine Company manufactures both pesticide and...Ch. 7 - Refer to the data in Exercise 7.20. The company...Ch. 7 - Eilers Company has two producing departments and...Ch. 7 - Refer to the data in Exercise 7.22. The company...Ch. 7 - Refer to the data in Exercise 7.22. The support...Ch. 7 - Alomar Company manufactures four products from a...Ch. 7 - Refer to Exercise 7.25 and allocate the joint...Ch. 7 - Pacheco, Inc., produces two products, overs and...Ch. 7 - Minor Co. has a job order cost system and applies...Ch. 7 - A CPA would recommend changing from plantwide...Ch. 7 - A company uses charging rates to allocate service...Ch. 7 - Chester Company provided information on overhead...Ch. 7 - Which of the following statements is true? a. The...Ch. 7 - Biotechtron, Inc., has two research laboratories...Ch. 7 - AirBorne is a small airline operating out of...Ch. 7 - Duweynie Pottery, Inc., is divided into two...Ch. 7 - Macalister Corporation is developing departmental...Ch. 7 - Prob. 37PCh. 7 - Welcome Inns is a chain of motels serving business...Ch. 7 - Sonimad Sawmill, Inc. (SSI), purchases logs from...Ch. 7 - Prob. 40P
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