Part #1: Your employer is Crackpots, Inc, a manufacturer of fine quality vases. As General manager...

  

 

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Part #1: Your employer is Crackpots, Inc, a manufacturer of fine quality vases. As General manager of the Wayne, Nebraska plant, you supervise production of two models of vases. Traditional and Contemporary The president and founder of the company, Sally Weber, has always relied on accounting information generated from conventional costing methods that allocated overhead costs based on a single driver of machine hours. Selling prices for the products have been set at cost plus a 60% markup. You are familiar with Activity-Based Costing, and wonder whether implementing this type of system will improve budgeting, pricing, decision-making, and identifying cost saving strategies You have collected the following information Quantity Product Traditional 250,000 Contemporary 80,000 Prime Costs $1,000,000 $ 280,000 Machine Hrs. 72,000 Material Moves 700,000 100,000 Setups 326 20,000 165 Activity Maintenance Material Handling Setups Overhead Cost $299,000 $360,000 $491,000 Create a spreadsheet determining: a. Unit cost and selling price of each vase using conventional costing b. Total gross profit generated from sales when conventional costing was used to determine selling price c. Unit cost and selling price of each vase using activity-based costing d. Total gross profit that would have been generated from sales had activity-based costing been used to determining selling price When you get to class, you will write a memo to Sally explaining what the numbers show and answering some questions she has for you. Part #2: Next year, Crackpots, Inc. is considering manufacturing one of three possible new products at the Wayne plant. In the last few months, you have been extensively discussing the matter with Gill Jones, Vice-President in Charge of Production. The marketing and accounting departments have provided you with the following relevant information: Total Expected Annual Selling Price Per Unit $ 8.00 $ 5.00 $ 6.00 Variable Cost Per Unit $3.50 Fixed Costs $22,500 $11,000 $30,000 Product Planter Sales in Units 12,000 $3.75 $4.50 Ceramic Vase 18,000 Earthenware 38,000 Create a spreadsheet determining: a. Contribution Margin Per Unit for each of the products b. Breakeven in Units for each of the products c. Margin of Safety in Units for each of the products d. Expected profitability for the firm for each of the products (assuming expected annual sales materialize) When you get to class, you will write a memo to Gill explaining what the numbers show and answering some questions he has for you. Part #1: Your employer is Crackpots, Inc, a manufacturer of fine quality vases. As General manager of the Wayne, Nebraska plant, you supervise production of two models of vases. Traditional and Contemporary The president and founder of the company, Sally Weber, has always relied on accounting information generated from conventional costing methods that allocated overhead costs based on a single driver of machine hours. Selling prices for the products have been set at cost plus a 60% markup. You are familiar with Activity-Based Costing, and wonder whether implementing this type of system will improve budgeting, pricing, decision-making, and identifying cost saving strategies You have collected the following information Quantity Product Traditional 250,000 Contemporary 80,000 Prime Costs $1,000,000 $ 280,000 Machine Hrs. 72,000 Material Moves 700,000 100,000 Setups 326 20,000 165 Activity Maintenance Material Handling Setups Overhead Cost $299,000 $360,000 $491,000 Create a spreadsheet determining: a. Unit cost and selling price of each vase using conventional costing b. Total gross profit generated from sales when conventional costing was used to determine selling price c. Unit cost and selling price of each vase using activity-based costing d. Total gross profit that would have been generated from sales had activity-based costing been used to determining selling price When you get to class, you will write a memo to Sally explaining what the numbers show and answering some questions she has for you. Part #2: Next year, Crackpots, Inc. is considering manufacturing one of three possible new products at the Wayne plant. In the last few months, you have been extensively discussing the matter with Gill Jones, Vice-President in Charge of Production. The marketing and accounting departments have provided you with the following relevant information: Total Expected Annual Selling Price Per Unit $ 8.00 $ 5.00 $ 6.00 Variable Cost Per Unit $3.50 Fixed Costs $22,500 $11,000 $30,000 Product Planter Sales in Units 12,000 $3.75 $4.50 Ceramic Vase 18,000 Earthenware 38,000 Create a spreadsheet determining: a. Contribution Margin Per Unit for each of the products b. Breakeven in Units for each of the products c. Margin of Safety in Units for each of the products d. Expected profitability for the firm for each of the products (assuming expected annual sales materialize) When you get to class, you will write a memo to Gill explaining what the numbers show and answering some questions he has for you.

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2014 Week 13 March Part Wednesday 26 O83280 calculation o selling ... View the full answer