Introduction Benton Textiles have developed a new process‚ which can apply a special finish to certain types of textiles. The subsequent analysis will discuss two of the key questions that every company faces when it introduces a new product: Which market should the company target? And how should the new product be priced? The alternatives for Benton is either to enter the higher priced market‚ to the lower priced market‚ or to combine the two and first enter the higher priced market and then move
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512 619 152 281 Episodic supplies (for special conditions) 310 695 98 680 212 015 Total supply costs 975 595 611 299 364 296 Service costs General overhead (occupancy‚ administration) 785 825 466 610 319 215 Facility costs (rent‚depreciation) 233 226 146 932 86 294 Administration and support staff 354 682 220
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Controllers Material $16.00 $20.00 $22.00 Direct Labor 4.00 8.00 6.40 Overhead 17.56 35.12 28.10 (439% of Direct Labor $) Standard unit cost $37.56 $63.12 $56.50 *Overhead Machine depreciation $270‚000 Set-up labor 2‚688 Receiving 20‚000 Materials handling 200‚000 Engineering 100‚000 Packing and shipping 60‚000 Maintenance 30‚000 Total overhead $682‚688 Total run labor = 9‚725 hours x $16 = $155‚600 Overhead rate = 682‚688 / 155‚600 = 439% Question 2. Estimated "Contribution Margin"
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INCREMENTAL ANALYSIS TRUE-FALSE STATEMENTS 1. An important step in management ’s decision-making process is to determine and evaluate possible courses of action. 2. In making decisions‚ management ordinarily considers both financial and nonfinancial information. 3. In incremental analysis‚ total variable costs will always change under alternative courses of action‚ and total fixed costs will always remain constant. 4. Accountants are mainly involved in developing nonfinancial information
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| 20‚000 | Total costs | $321‚000 | $182‚000 | $197‚000 | $212‚000 | $94‚000 | Problem 2-3 (continued) 2. Direct | $212‚000 | Indirect | 94‚000 | Total | $306‚000 | $306‚000 ÷ 2‚000 sets = $153 per set | | 3. The average product cost per set would increase. This is because the fixed costs would be spread over fewer units‚ causing the cost per unit to rise. 4. a) Yes‚ the president may expect a minimum price of
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Materials | |$360‚000 | | | | Direct Labor | |90‚000 | | | | Manufacturing Overhead | |135‚000 | |585‚000 | |Total costs to be accounted for | | | |$739‚000 | The beginning inventory of Work
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Having employees work at home as opposed to in-facility is significantly less costly. According to Table A in the case‚ annual recurring costs for each individual working in-facility is around $10‚650. That is over twice the recurring cost of the average work@home employee with an ISDN connection and over 20 times the annual recurring cost of a work@home employee with a cable modem connection. Given the large quantity work@home employees at Putnam‚ this program provides a method of greatly reducing
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page of the catalogue. Each plate requires 4 hours of labour at £7 per hour and £35 of materials. Overheads are absorbed on the basis of labour hours at an hourly rate of £9.50. In printing‚ paper costs £12 per thousand sheets. Material losses are expected to be 2% of input. Other printing materials will cost £7 per 500 catalogues. 1000 catalogues are printed per hour of machine time. Labour and overhead costs incurred in printing are absorbed at a rate of £62 per machine hour. Binding costs are recovered
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to each item produced—no allocation was needed. On the other hand‚ the rent of the building that houses the production area‚ warehouse‚ and office is not a direct cost of either the production department or the items produced. Indirect Costs (overheads) A.k.a facilities and administrative costs (F&A)‚ cannot be clearly related to the level of output of any single product‚ i.e. they are not directly linked with the level of production ot sale of a product. For example‚ the costs of fuel and power
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ISSUES IN ACCOUNTING EDUCATION Vol. 28‚ No. 3 2013 pp. 637–652 American Accounting Association DOI: 10.2308/iace-50464 Dream Chocolate Company: Choosing a Costing System Kip R. Krumwiede and W. Darrell Walden ABSTRACT: This case is about a small‚ but real‚ company‚ Dream Chocolate (D.C.)‚ which makes custom-labeled‚ high-quality candy bars for special events and advertising purposes. Like many small companies‚ D.C. has an inadequate costing system and needs a much better one as it starts to get
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