1. Calculate expected gross margin if Riley produces 22,000, 27,500, or 29,700 books. (Make sure you...

 

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1. Calculate expected gross margin if Riley produces 22,000, 27,500, or 29,700 books. (Make sure you include the production-volume variance as part of cost of goods sold.) 2. Calculate ending inventory in units and in dollars for each production level. 3. Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. There are metrics to discourage managers from producing products in excess of demand. Do you think the following metrics will accomplish this objective? Show your work. a. Incorporate a charge of 15% of the cost of the ending inventory as an expense for evaluating the manager. b. Include nonfinancial measures when evaluating management and rewarding performance. Academy Press produces textbooks for high school accounting courses. The company recently hired a new editor, Riley Green, to handle production and sales of books for an introductory accounting course. Riley's compensation depends on the gross margin associated with sales of this book. Riley needs to decide how many copies of the book to produce. The following information is available for the fall semester 2020: (Click the icon to view the information.) Riley has decided to produce either 22,000, 27,500, or 29,700 books. Read the requirements. Requirement 1. Calculate expected gross margin if Riley produces 22,000, 27,500, or 29,700 books. (Make sure you include the production-volume variance as part of cost of goods sold.) Calculate the gross margin for each level of production. Begin with 22,000 books, then 27,500 books, and lastly 29,700 books. (Enter a "0" for any zero balance accounts. If an account does not have a variance, do not select a label.) Revenues Cost of goods sold Production-volume variance Net cost of goods sold Gross margin 22,000 books 1. Calculate expected gross margin if Riley produces 22,000, 27,500, or 29,700 books. (Make sure you include the production-volume variance as part of cost of goods sold.) 2. Calculate ending inventory in units and in dollars for each production level. 3. Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. There are metrics to discourage managers from producing products in excess of demand. Do you think the following metrics will accomplish this objective? Show your work. a. Incorporate a charge of 15% of the cost of the ending inventory as an expense for evaluating the manager. b. Include nonfinancial measures when evaluating management and rewarding performance. Academy Press produces textbooks for high school accounting courses. The company recently hired a new editor, Riley Green, to handle production and sales of books for an introductory accounting course. Riley's compensation depends on the gross margin associated with sales of this book. Riley needs to decide how many copies of the book to produce. The following information is available for the fall semester 2020: (Click the icon to view the information.) Riley has decided to produce either 22,000, 27,500, or 29,700 books. Read the requirements. Requirement 1. Calculate expected gross margin if Riley produces 22,000, 27,500, or 29,700 books. (Make sure you include the production-volume variance as part of cost of goods sold.) Calculate the gross margin for each level of production. Begin with 22,000 books, then 27,500 books, and lastly 29,700 books. (Enter a "0" for any zero balance accounts. If an account does not have a variance, do not select a label.) Revenues Cost of goods sold Production-volume variance Net cost of goods sold Gross margin 22,000 books