Following a strategy of product differentiation, Caribbean Corporation makes a high-end computer monitor, PRODUCT A. Caribbean...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Following a strategy of product differentiation, Caribbean Corporation makes a high-end computer monitor, PRODUCT A. Caribbean Corporation presents the following data for the years 2019 and 2020: Units of PRODUCT A produced and sold Selling price Direct materials (pounds) 2019 5,000 P400 15,000 P40 10,000 P1,000,000 Direct materials costs per pound Manufacturing capacity for PRODUCT A (units) Conversion costs Conversion costs per unit of capacity Selling and customer-service capacity (customers) Total selling and customer-service costs P360,000 Selling and customer-service capacity cost per customer P6,000 P100 60 2020 5,500 P440 15,375 P44 10,000 P1,100,000 P110 58 P362,500 P6,250 Caribbean Corporation produces no defective units but it wants to reduce direct materials usage per unit of PRODUCT A in 2020. Manufacturing conversion costs in each year depend on production capacity defined in terms of PRODUCT A units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Caribbean Corporation has 100 customers in 2019 and 115 customers in 2020. The industry market size for high-end computer monitors increased 5% from 2019 to 2020. Required: a. Calculate operating income of Caribbean Corporation for 2019 and 2020 b. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2019-2020. c. Calculate d. What is the revenue effect of the growth component? e. What is the cost effect of the growth component? f. What is the net effect on operating income as a result of the growth component? g. Calculate how much of the change in operating income from 2019 to 2020 is due to the industry-market-size, factor, product differentiation and cost leadership? Following a strategy of product differentiation, Caribbean Corporation makes a high-end computer monitor, PRODUCT A. Caribbean Corporation presents the following data for the years 2019 and 2020: Units of PRODUCT A produced and sold Selling price Direct materials (pounds) 2019 5,000 P400 15,000 P40 10,000 P1,000,000 Direct materials costs per pound Manufacturing capacity for PRODUCT A (units) Conversion costs Conversion costs per unit of capacity Selling and customer-service capacity (customers) Total selling and customer-service costs P360,000 Selling and customer-service capacity cost per customer P6,000 P100 60 2020 5,500 P440 15,375 P44 10,000 P1,100,000 P110 58 P362,500 P6,250 Caribbean Corporation produces no defective units but it wants to reduce direct materials usage per unit of PRODUCT A in 2020. Manufacturing conversion costs in each year depend on production capacity defined in terms of PRODUCT A units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Caribbean Corporation has 100 customers in 2019 and 115 customers in 2020. The industry market size for high-end computer monitors increased 5% from 2019 to 2020. Required: a. Calculate operating income of Caribbean Corporation for 2019 and 2020 b. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2019-2020. c. Calculate d. What is the revenue effect of the growth component? e. What is the cost effect of the growth component? f. What is the net effect on operating income as a result of the growth component? g. Calculate how much of the change in operating income from 2019 to 2020 is due to the industry-market-size, factor, product differentiation and cost leadership?
Expert Answer:
Answer rating: 100% (QA)
What is the revenue effect of the growth component Answer REVENUE EFFECT 2017 2018 CHANGE No of unit... View the full answer
Related Book For
Accounting Principles
ISBN: 978-1119411482
13th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
The Cakebread Candy Company presents the following data for October: During the month, the firm purchased 49,000 pounds of materials for $127,500. Wages earned were $214,000. Compute the labor and...
-
Companies following a strategy of Product Differentiation are continuously carrying forward Research and Development. Sometimes, Research and Development result in success while at times it may fail....
-
Following a strategy of product differentiation, Huntington Corporation makes a high-end Computer Monitor, CM12. Huntington Corporation presents the following data for the years 1 and 2: Year 1 Year...
-
Solve parts b and d of Problem 2.67 assuming that the free end of the rope is attached to the crate. Problem 2.67: A 280-kg crate is supported by several rope-and-pulley arrangements as shown....
-
Random samples from two binomial populations yielded the following statistics: p1 = .45 n1 = 100 p2 = .40 n2 = 100 a. Calculate the p-value of a test to determine whether we can infer that the...
-
Discuss why combining multiple factors into a portfolio can be beneficial to investors.
-
In July 2017, Latrice Merritt entered a residential lease with Doran 610 Apartments, LLC. Under the terms of the lease agreement, Merritt was prohibited from installing a private security system in...
-
Cost Structure to erratic sales of its sole producta high-capacity battery for laptop computersPEM, Inc., has been experiencing difficulty for some time. The companys contribution format income...
-
Consider that your cache is a direct mapped memory. It can hold up to 256 byte of data in 32-bit MIPS architecture. (a) Assuming that your block numbers, validity bits, and space allocated for tags...
-
In this mini-case you will perform some procedures required as a part of audit planning. For ease your audit manager has already organized the workpapers and completed several of the required...
-
About 1 in every 2,000 people born is intersex, meaning a) they will develop an androgynous gender b) they will likely identify as asexual as their hormones develop c) the development of a person's...
-
Explain normal return, abnormal return, and cumulative abnormal return.
-
Discuss some of the major pros and cons of nonparametric rank tests in event studies.
-
If U.S. wholesalers buy roses at the lowest possible price, how many do they buy from U.S. growers and how many do they import? Wholesalers buy and sell roses in containers that hold 120 stems. The...
-
How did Fama and French (1993) cross-sectionally test the three-factor model? What did they find in test results?
-
Kolari, Liu, and Zhang (KLH) (2021) proposed a novel empirical ZCAPM to capture positive and negative sensitivity to return dispersion (i.e., zeta risk). Write their empirical model. What is D it in...
-
Engberg Company installs grass in the backyards of houses. The company's most recent monthly contribution income statement is as follows: Amount percent of sales Sales ps 148.000 100% Variable...
-
Construct a 4 x 25 design confounded in two blocks of 16 observations each. Outline the analysis of variance for this design.
-
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,000; second quarter 6,000;...
-
K. Kolmer, C. Eidman, and C. Ryno share income on a 5:3:2 basis. They have capital balances of $34,000, $26,000, and $21,000, respectively, when Don Jernigan is admitted to the partnership....
-
Peosta Company identifies the following items for possible inclusion in the taking of a physical inventory. Indicate whether each item should be included or excluded from the inventory taking. (a)...
-
What a difference a single outlier can make! The data set in Table 7.7 presents a collection of ordered pairs \((x, y)\). a. Using Minitab, draw a scatterplot and run a simple linear regression...
-
A plant manager wants to estimate how the number of units produced at a plant is affected by the number of employees. The data in Table 7.9 gives a random sample of the number of units produced and...
-
Can the use of social media stress you out? A researcher is interested in finding out whether college students who extensively use social media tend to have higher levels of stress. To test this, a...
Study smarter with the SolutionInn App