John Dorilane IV is president and CEO of Dorilane Furniture Co. of Milltown Pa. Dorilane Furniture...
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John Dorilane IV is president and CEO of Dorilane Furniture Co. of Milltown Pa. Dorilane Furniture Co. produces a very successful patio furniture set that retails for $1,200. All the sets produced are sold and they are typically backordered for a month. At the family New Year gathering, feeling in a particularly charitable mood, John promised his sister Dora and her husband Fred a set of Patio furniture at cost. On January 10, John received a letter from Fred and Dora requesting a furniture set. John was shocked to find that his sister had purloined confidential cost accounting information from the firm and used it to ask for a set of furniture at a ridiculously low price. The cost accounting information appropriated by Dora is given below: Cost Item Factory labor, Direct Direct Materials Advertising Factory Supervision Property Tax, Factory building Sales Commissions Insurance, Factory Depreciation, Office Equipment Lease Cost, factory equipment Indirect Materials, Factory Depreciation, Factory building General Office supplies General office salaries Annual Costs (2,000 units) $118,000.00 $82,000.00 $50,000.00 $40,000.00 $ 3,500.00 $80,000.00 $ 2,500.00 $4,000.00 $ 12,000.00 $ 6,000.00 $10,000.00 $3,000.00 $ 60,000.00 The point of this exercise is to see that the term "at cost" may mean very different things to different people. You are required to post (individually) what you think is a reasonable price for John to charge his sister and brother-in-law Group Assignment 1) Write a letter from Fred and Dora to John suggesting the lowest possible cost that you think can be justified and a brief justification as to why this is the true cost (1 page or less) 2) Write a letter back from John suggesting the highest possible cost that you think can be justified and a brief justification for why this is the true cost (1 page or less) John Dorilane IV is president and CEO of Dorilane Furniture Co. of Milltown Pa. Dorilane Furniture Co. produces a very successful patio furniture set that retails for $1,200. All the sets produced are sold and they are typically backordered for a month. At the family New Year gathering, feeling in a particularly charitable mood, John promised his sister Dora and her husband Fred a set of Patio furniture at cost. On January 10, John received a letter from Fred and Dora requesting a furniture set. John was shocked to find that his sister had purloined confidential cost accounting information from the firm and used it to ask for a set of furniture at a ridiculously low price. The cost accounting information appropriated by Dora is given below: Cost Item Factory labor, Direct Direct Materials Advertising Factory Supervision Property Tax, Factory building Sales Commissions Insurance, Factory Depreciation, Office Equipment Lease Cost, factory equipment Indirect Materials, Factory Depreciation, Factory building General Office supplies General office salaries Annual Costs (2,000 units) $118,000.00 $82,000.00 $50,000.00 $40,000.00 $ 3,500.00 $80,000.00 $ 2,500.00 $4,000.00 $ 12,000.00 $ 6,000.00 $10,000.00 $3,000.00 $ 60,000.00 The point of this exercise is to see that the term "at cost" may mean very different things to different people. You are required to post (individually) what you think is a reasonable price for John to charge his sister and brother-in-law Group Assignment 1) Write a letter from Fred and Dora to John suggesting the lowest possible cost that you think can be justified and a brief justification as to why this is the true cost (1 page or less) 2) Write a letter back from John suggesting the highest possible cost that you think can be justified and a brief justification for why this is the true cost (1 page or less)
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1 Dear John We are writing to request a set of patio furniture at cost We are confident that we have ... View the full answer
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Posted Date:
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