?? ? ? ? Travel Outfitters operates a large outdoor clothing and equipment store with three main
Fantastic news! We've Found the answer you've been seeking!
Question:
?? ??
?
Transcribed Image Text:
Travel Outfitters operates a large outdoor clothing and equipment store with three main product lines: clothing, equipment, and shoes. Travel Outfitters operates at capacity and allocates selling, general, and administration (S, G & A) costs to each product line using the cost of merchandise of each product line. The company wants to optimize the pricing and cost management of each product line and is wondering if its accounting system is providing it with the best information for making such decisions. Requirement 1. Suppose Travel Outfitters uses cost of merchandise to allocate all S, G & A costs. Prepare budgeted product-line and total company income statements. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Revenues Cost of merchandise Selling, general and administrative costs Total costs Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing $ $ 1,360,000 $ Store manager Alex Baxter gathers the following information regarding the three product lines: (Click the icon to view the product line information.) 808,500 436,590 1,245,090 For 2017, Travel Outfitters budgets the following selling, general, and administration costs: (Click the icon to view the selling, general, and administration costs.) Read the requirements. 114,910 $ Equipment 1,790,000 $ 1,200,500 648,270 1,848,770 (58,770) $ Shoes 810,000 $ 441,000 238,140 679,140 130,860 $ Total 3,960,000 2,450,000 1,323,000 3,773,000 187,000 Operating income (loss) Requirement 2. Identify an improved method for allocating costs to the three product lines. Explain. Use the method for allocating S, G & A costs that you propose to prepare new budgeted product line and total company income statements. Compare your results to the results in requirement 1. An improved method for allocating costs to the three product lines is activity based costing. This method is more appropriate because of the variety of products and large dollar value of indirect costs. Begin by identifying the most appropriate cost driver for each cost category. Select the best explanation for the use of each cost driver. (Use the cost of merchandise if the expense is not tied to any of the other cost drivers.) F(Click the icon to view the explanation responses.) Expense Purchasing department expense Receiving department expense Customer support expense Rent General store advertising Store manager's salary Cost driver Number of purchase orders Number of boxes received Revenue dollars Square feet of store space Revenue dollars Cost of merchandise Explanation D B E F E G Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing Equipment Revenues Cost of merchandise Selling, general and administrative costs. Total costs Operating income (loss) Shoes Total Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing Equipment Revenues Cost of merchandise Selling, general and administrative costs. Total costs Operating income (loss) Shoes Total Data Table Travel Outfitters Selling General, and Administration (S, G, & A) Costs For the Year Ended December 31, 2017 Purchasing department expense Receiving department expense Customer support expense (cashiers and floor employees) Rent General store advertising Store manager's salary Total Cost of merchandise Selling, general and administrative costs Total costs Operating income (loss) Print Done remaining Enter any number in the edit fields and then click Check Answer. 2 parts $ $ 334,800 273,000 198,000 340,000 79,200 98,000 1,323,000 x Sto BB For Re of allo i Requirement 1. Suppose Travel Outfitters uses cost of merchandise to allocate all S, G & A costs. Prepare budgeted product-line and total company income statements. 2. Identify an improved method for allocating costs to the three product lines. Explain. Use the method for allocating S, G & A costs that you propose to prepare new budgeted product-line and total company income statements. Compare your results to the results in requirement 1. (Customer support and advertising have been linked very closely with store sales.) 3. Write a memo to Travel Outfitters management describing how the improved system might be useful for managing the store. Travel Outfitters Budgeted Product-Line Information For the Year Ended December 31, 2017 Revenues Cost of merchandise Number of purchase orders placed Number of boxes received Square feet of store space Total Clothing Equipment Shoes $ 1,360,000 $ 1,790,000 $ 810,000 $3,960,000 $ 808,500 $ 1,200,500 $441,000 $ 2,450,000 220 460 4,300 Print Done 130 220 14,000 190 370 1,700 540 1,050 20,000 X Answer ? Travel Outfitters operates a large outdoor clothing and equipment store with three main product lines: clothing, equipment, and shoes. Travel Outfitters operates at capacity and allocates selling, general, and administration (S, G & A) costs to each product line using the cost of merchandise of each product line. The company wants to optimize the pricing and cost management of each product line and is wondering if its accounting system is providing it with the best information for making such decisions. Requirement 1. Suppose Travel Outfitters uses cost of merchandise to allocate all S, G & A costs. Prepare budgeted product-line and total company income statements. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Revenues Cost of merchandise Selling, general and administrative costs Total costs Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing $ $ 1,360,000 $ Store manager Alex Baxter gathers the following information regarding the three product lines: (Click the icon to view the product line information.) 808,500 436,590 1,245,090 For 2017, Travel Outfitters budgets the following selling, general, and administration costs: (Click the icon to view the selling, general, and administration costs.) Read the requirements. 114,910 $ Equipment 1,790,000 $ 1,200,500 648,270 1,848,770 (58,770) $ Shoes 810,000 $ 441,000 238,140 679,140 130,860 $ Total 3,960,000 2,450,000 1,323,000 3,773,000 187,000 Operating income (loss) Requirement 2. Identify an improved method for allocating costs to the three product lines. Explain. Use the method for allocating S, G & A costs that you propose to prepare new budgeted product line and total company income statements. Compare your results to the results in requirement 1. An improved method for allocating costs to the three product lines is activity based costing. This method is more appropriate because of the variety of products and large dollar value of indirect costs. Begin by identifying the most appropriate cost driver for each cost category. Select the best explanation for the use of each cost driver. (Use the cost of merchandise if the expense is not tied to any of the other cost drivers.) F(Click the icon to view the explanation responses.) Expense Purchasing department expense Receiving department expense Customer support expense Rent General store advertising Store manager's salary Cost driver Number of purchase orders Number of boxes received Revenue dollars Square feet of store space Revenue dollars Cost of merchandise Explanation D B E F E G Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing Equipment Revenues Cost of merchandise Selling, general and administrative costs. Total costs Operating income (loss) Shoes Total Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing Equipment Revenues Cost of merchandise Selling, general and administrative costs. Total costs Operating income (loss) Shoes Total Data Table Travel Outfitters Selling General, and Administration (S, G, & A) Costs For the Year Ended December 31, 2017 Purchasing department expense Receiving department expense Customer support expense (cashiers and floor employees) Rent General store advertising Store manager's salary Total Cost of merchandise Selling, general and administrative costs Total costs Operating income (loss) Print Done remaining Enter any number in the edit fields and then click Check Answer. 2 parts $ $ 334,800 273,000 198,000 340,000 79,200 98,000 1,323,000 x Sto BB For Re of allo i Requirement 1. Suppose Travel Outfitters uses cost of merchandise to allocate all S, G & A costs. Prepare budgeted product-line and total company income statements. 2. Identify an improved method for allocating costs to the three product lines. Explain. Use the method for allocating S, G & A costs that you propose to prepare new budgeted product-line and total company income statements. Compare your results to the results in requirement 1. (Customer support and advertising have been linked very closely with store sales.) 3. Write a memo to Travel Outfitters management describing how the improved system might be useful for managing the store. Travel Outfitters Budgeted Product-Line Information For the Year Ended December 31, 2017 Revenues Cost of merchandise Number of purchase orders placed Number of boxes received Square feet of store space Total Clothing Equipment Shoes $ 1,360,000 $ 1,790,000 $ 810,000 $3,960,000 $ 808,500 $ 1,200,500 $441,000 $ 2,450,000 220 460 4,300 Print Done 130 220 14,000 190 370 1,700 540 1,050 20,000 X Answer ?
Expert Answer:
Answer rating: 100% (QA)
Anonymous answered thi CONE Calculation of Activityaabe Cast Driver Adho rat total cost CA Ad... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
Students also viewed these accounting questions
-
Mountain Outfitters operates a large outdoor clothing and equipment store with three main product lines: clothing, equipment, and shoes. Mountain Outfitters operates at capacity and allocates...
-
Describe a potential cost driver for each of the variable and mixed costs you listed. Explain why each cost driver would be appropriate for its associated cost.
-
Each year, a large clothing store in New York City sends its top five salespersons on a five-day retreat in Orlando, Florida. The retreat begins on the first Monday in February and ends the following...
-
Which statement does NOT reflect a way that journals require authors to disclose potential or actual conflicts of interest? Group of answer choices Require researcher's Federal tax statements Require...
-
What is the difference between computer fraud and computer crime?
-
In this chapter, we saw that financial market integration is necessary for countries to smooth consumption through borrowing and lending. Consider two economies, Albania and Austria. Both are former...
-
2. Why does our law come from so many different sources?
-
On January 1, 2008, Carlin Corporation issued $2,400,000 of 5-year, 8% bonds at 95; the bonds pay interest semiannually on July 1 and January 1. By January 1, 2010, the market rate of interest for...
-
Need urgent. Your question: You are required to obtain the annual reports of two ASX Top 200 companies in the same i the following questions related to the items included in property, plant and...
-
Joy camera plans to expand to the European market. The company considers buying Enola Plc, a privately owned company headquartered in the UK. The EBIT (earnings before interest and taxes) for Enola...
-
In the last decade stockbrokers have drastically changed the way they do business. Internet trading has became quite common and online trades can cost as little as $7. It is now easier and cheaper to...
-
The random sample above depicts a lower listing price and square footage versus what the national market shows. The lower than national square footage of properties on the average listing prices...
-
Delicious Dave's Maple Syrup, a Vermont Corporation, has property in the following states: Property Beginning Maine State Massachusetts New Hampshire Vermont Total $ 923,032 $ 103,311 $ 381,983 $...
-
A $1,000 face value bond matures in 6 years, pays interest semiannually, and has a 7 percent coupon. The bond currently sells for $1,208. What is the yield to maturity?
-
Assume contractionary monetary policies have had the effect of lowering inflation rates from a 6% annual rate down to 2%. What do economists call this drop in inflation?
-
Los Angeles Lumber Company is considering a project with a cost of $1,000 initially, and inflows of $300 at the end of years 1-5. LALC's cost of capital is 12 percent. What is the project's IRR and...
-
5. What is NOT an effective organizational structure to foster innovation? By creating a separate business unit. By creating an innovation unit. By appointing an innovation manager. By adding an...
-
Government is advised to tax goods whose demand curves are inelastic if the goal is to raise tax revenues. If the goal is to discourage consumption, then it ought to tax goods whose demand curves are...
-
Klein Dermatology is contemplating purchasing new laser therapy equipment. This new equipment would cost $300,000 to purchase and $20,000 for installation. Klein estimates that this new equipment...
-
The Tomlinson Company manufactures trendy, high-quality, moderately priced watches. As Tomlinsons senior financial analyst, you are asked to recommend a method of inventory costing. The CFO will use...
-
Fancy Foods is considering replacing all 12 of its meat scales with new, digital ones. The old scales are fully depreciated and have no disposal value. The new scales cost $120,000 (in total)....
-
What is meant by "washing checks?"
-
Describe a lapping scheme and an audit step to discover lapping.
-
What is a cut-off bank reconciliation?
Study smarter with the SolutionInn App