January 1 December 31
Raw material $50,000 $35,000
Work in process 130,000 170,000
Finished goods 280,000 255,000
During the year, the company purchased $100,000 of raw material and incurred $340,000 of direct labor costs. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%.
Clothing Shoes Accessories
Sales $850,000 $320,000 $150,000
Less: Variable costs $510,000 $270,000 $82,500
Fixed costs 290,000 70,000 42,000
Total costs $800,000 $340,000 $124,500
Operating income (loss)$50,000 $(20,000) $25,500
Management is considering closing the shoe operation because of the loss and expanding the space that is currently devoted to accessories sales. A salaried salesperson in the shoe department who earns $45,000 will be terminated; however, all other departmental fixed costs will continue to be incurred. TWU Clothing will spend $16,000 on remodeling costs and anticipates that accessories sales will increase by $70,000. This additional sales revenue is expected to generate a 35% contribution margin for the firm. Finally, because clothing customers often purchased shoes and feel strongly about “one-stop shopping,” clothing sales are expected to fall by 15% if the shoe department is closed.
Your supervisor has asked you to determine whether the shoe department should be closed and the effect upon income if closed.
|1.||Allocated corporate overhead||Closing a money-losing department|
|2.||Cost of an old car||Vehicle replacement|
|3.||Direct materials||Make or buy a product|
|4.||Salary of marketing manager||Project discontinuance; manager to be transferred elsewhere in the firm|
|5.||Home theater installation||Purchase of a new home|
|6.||Unavoidable fixed overhead||Plant closure|
|7.||Research expenditures incurred last year, related to new product||Product introduction to marketplace|
|8.||$4 million advertising program||Whether to promote product A or B with the $4 million program|
|9.||Manufactured cost of existing inventory||Whether to discard the goods or sell them to a third-world country|
Consider each of the nine costs listed and determine whether it is relevant or irrelevant to the decision cited. If the cost is irrelevant, briefly explain why.
The hospital’s business office has provided the following information for food service for the year just ended: food costs, $890,000; labor, $85,000; variable overhead, $35,000; allocated fixed overhead, $60,000; and cafeteria net income, $80,000.
Conversations with ABC personnel revealed the following information:
a. ABC fwill charge St. Luke’s Hospital $14 per day for each patient served..
b. Presbyterian’s 250-bed facility operates throughout the year and typically has an average occupancy rate of 70%.
c. Labor is the primary driver for variable overhead. If an outsourcing agreement is reached, hospital labor costs will drop by 90%.
A. What is meant by the term “outsourcing”?
We value our customers and so we ensure that what we do is 100% original..
At Custom Writing, we believe in exemplary services that are fully geared toward customer satisfaction. That is why we don’t shy away from giving you the following guarantees;
Trusting us with your work is the best decision you have made, our pleasure lies in seeing you satisfied at 100%. If in the rear chance it happens that you are not satisfied, then know that we will equally not be satisfied. But worry not, our 30 days- Money back guarantee is all you need and that is what we promise you..Read more
We utilize profoundly equipped and gifted writers who produce unique papers liberated from any form of plagiarism. To guarantee this, we run all papers finished by our scholars through a Plagiarism checker to ensure uniqueness and originality. In any case, on the off chance that you have vulnerabilities about the originality or falsification of any paper we have finished and conveyed to you, please get in touch with us straight away. We will quickly investigate, and if the paper is seen as counterfeited, we will take suitable actions including but not limited to, revising the paper for free and in extreme cases we will activate the money back guarantee.Read more
We have an obligation deliver great and specially composed assignments. Our revision strategy endeavors to ensure total client satisfaction, comfort, and a genuine feelings of serenity. We make minor updates and corrections to the underlying request as part of our continuous assistance. However, revisions should just incorporate changes and alterations that were not effectively met, in the underlying request and that are inside the rules as per the current request structure..Read more
Our client's Data is an Integral part of our business but clearly, we are not in the business of offering our clients' very own data to others. We realize that you care how your online data is utilized and shared, we equally value your trust that we will do so cautiously and sensibly. We Promise to ensure the security of your own data during transmission by utilizing encryption conventions and programming. Likewise assist us with securing your information by not sharing your passwords and usernames.Read more
In submitting a request with us, you consent to the services we give. We will strive to take the necessary steps to convey a far reaching paper according to your prerequisites. Equally we depend on your cooperation to guarantee that we convey on this order.Read more