The Scherzer Corporation produces and markets two types of laptops: Model 4 seamer and Model slider. Corporate
Question:
The Scherzer Corporation produces and markets two types of laptops: Model 4 seamer and Model slider.
Corporate fixed expenses are common in nature, and thus will not be eliminated or reduced by eliminations of models, however, it was determined that the internal accountant allocated based on ratio of traceable fixed production costs in his work up.
The following data was gathered on activities during the third quarter:
Model 4 seamer | Model slider | |
Sales in units | 5,000 | 2,500 |
Sales price per unit | $ 100 | $ 200 |
Variable production costs per unit | $ 20 | $ 40 |
Traceable fixed production costs | $ 200,000 | $ 300,000 |
Variable selling expenses per unit | $ 10 | $12 |
Traceable fixed selling expenses | $ 10,000 | $ 20,000 |
Allocated portion corporate fixed expenses | $ 100,000 | $ 150,000 |
Required:
A. Prepare a segmented income statement in good form for last quarter. The statement should provide sufficient detail to allow the company to evaluate the performance of the manager of each product line.
B. Should either of these models be eliminated? why or why not?
C. What is slider break- even in sales?
D. What is 4 seamer break-even in sales?
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra