Refer to information about Dowell Company in Problem 6-1A. In the company’s planning documents, Kyra Dowell, the company’s president, reports that the break-even volume (in units) for the company is 24,000 units. This break-even point is computed as follows. Break-even volume = Total fixed cost Contribution margin per unit = $540,000 $22.50 = 24,000 units Total fixed cost consists of $300,000 in fixed production cost and $240,000 in fixed selling and administrative expenses. The contribution margin per unit of $22.50 is computed by deducting the $23.50 variable cost per unit (which consists of $21 in variable production cost and $2.50 in variable selling and administrative cost) from the $46 sales price per unit. In 2012, the company sold 20,000 units, which was below break-even, and Kyra was concerned that the company’s income statement would show a net loss. To her surprise, the company’s 2012 income statement revealed a net income of $10,000 as shown in Problem 6-1A. Required Prepare a one-half-page memorandum to the president explaining how the company could report net income when it sold less than its break-even volume in units.
> Describe an industrial distributor. What types of products are marketed through an industrial distributor?
> Identify and describe the factors that may influence marketing channel selection decisions.
> Outline the four most common channels for business products. Describe the products or situations that lead marketers to choose each channel.
> Compare and contrast the four major types of marketing channels for consumer products. Through which type of channel is each of the following products most likely to be distributed: a) new automobiles, b) saltine crackers, c) cut-your-own Christmas trees
> List several reasons consumers often blame intermediaries for distribution inefficiencies.
> Describe the major functions of marketing channels. Why are these functions better accomplished through combined efforts of channel members?
> Under what conditions are tying agreements, exclusive dealing, and dual distribution judged illegal?
> Compare and contrast the five major transportation modes in terms of cost, speed, dependability.
> Explain the major differences between private and public warehouses. How do they differ from a distribution center?
> When The Wall Street Journal began charging for online access, the number of visitors to its site dropped dramatically and slowly began rising again. What does this suggest about the price elasticity of demand for its products?
> Explain the trade-offs that inventory managers face when reordering products or supplies. How is the reorder point computed?
> What are the main tasks involved in order processing?
> Discuss the cost and service trade-offs involved in developing a physical distribution system.
> Explain the major characteristics of each of the three types of vertical marketing systems (VMS): corporate, administered, and contractual.
> Explain the differences among intensive, selective, and exclusive methods of distribution.
> Marketing intermediaries perform many activities. Using Table 14.2 as a guide, discuss the types of activities where a channel member could provide needed assistance. Table 14.2 Table 14.2 Marketing Channel Activities Performed by Intermediaries Ma
> What issues in channel conflict might arise from Procter & Gamble’s special arrangements with Amazon.com?
> Do you think Procter & Gamble should use a direct channel to sell to consumers? Identify one or more arguments for and against using a direct channel for disposable diapers and paper towels.
> Would you recommend that Procter & Gamble use any mode of transportation other than trucks to transport cartons to retailers? Explain your answer.
> What ideas and services are involved in UNICEF’s product?
> What are the benefits of cost-based pricing?
> Identify UNICEF’s target public and client publics. Who is the target market for Good Shirts’ social media messages?
> What kinds of objectives do you think UNICEF set for the Good Shirts Project? How should UNICEF evaluate the results of this project?
> What are the challenges for the Chevrolet brand in the future?
> How has GM managed product innovation to sustain the Chevrolet brand for over 100 years?
> Evaluate the product mix brands Cruze, Camaro, and Corvette in terms of their target market.
> What is service quality? Why do customers find it difficult to judge service quality?
> For each marketing-mix element, which service characteristics are most likely to have an impact? Explain.
> Identify and discuss the major characteristics of services.
> How important are services in the U.S. economy?
> Discuss the development of a marketing strategy for a university. What marketing decisions must be made as the strategy is developed?
> Why should a marketer be aware of competitors’ prices?
> What are the differences among clients, publics, and customers? What is the difference between a target public and a target market?
> How does nonprofit marketing differ from marketing in for-profit organizations?
> What steps should a service company take to provide exceptional service quality?
> How do search, experience, and credence qualities affect the way customers view and evaluate services?
> What is the significance of tangibles in service marketing?
> Identify and discuss the five components of service quality. How do customers evaluate these components?
> Consider how your service product relates to each of the dimensions of service quality. Using Table 13.2 as a guide, develop the evaluation criteria and examples that are appropriate for your product. Table 13.2 Table 13.2 Dimensions of Service Qua
> Determine the search, experience, and credence qualities that customers are likely to use when evaluating your service product.
> How is American Express addressing the five dimensions customers use when evaluating service quality? Explain your answer.
> When American Express says its vision is to be “the world’s most respected service brand,” what are the implications for how it manages service expectations?
> Why must marketing objectives and pricing objectives be considered when making pricing decisions?
> For what type of products would price skimming be most appropriate? For what type of products would penetration pricing be more effective?
> Major League Bat Company manufactures baseball bats. In addition to its goods in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials
> Several important assumptions underlie CVP analysis. Assumptions often help simplify and focus our analysis of sales and costs. A common application of CVP analysis is as a tool to forecast sales, costs, and income. Required Assume that you are actively
> Azule Company produces a single product. Its income statement under absorption costing for its first two years of operation follow. Additional Informationa. Sales and production data for these first two years follow: b. Its variable cost per unit and
> Leather Head Sports, launched by entrepreneur Paul Cunningham, produces balls for various sports. Selling prices typically range from $40 per ball to $295 per ball. Required 1. Identify at least two fixed costs that will not change regardless of how man
> Companies such as KTM commonly prepare a process cost summary. What purposes does a process cost summary serve?
> A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a contract to the local grade school to show educational
> Farina Bay’s computer system generated the following trial balance on December 31, 2013. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Goods in Process I
> Refer to the information in Exercise 3-20 and complete it for each of the two separate assumptions using the FIFO method for process costing. Information from Exercise 3.20: ProChem manufactures aspirin in a process operation. Details on production acti
> ProChem manufactures aspirin in a process operation. Details on production activity follow. Compute the department’s equivalent units of production with respect to direct materials under each of two separate assumptions. Beginning goods in process . . .
> Dowell Company produces a single product. Its income statement under absorption costing for its first two years of operation follow. Additional Information a. Sales and production data for these first two years follow. b. Variable cost per unit and t
> Assume a company sells a given product for $85 per unit. How many units must be sold to break even if variable selling costs are $27 per unit, variable production costs are $23 per unit, and total fixed costs are $700,000?
> The focus in a job order costing system is the job or batch. Identify the main focus in process costing.
> Refer to the information in Exercise 4-6 to answer the following requirements. Information from Exercise 4-6: Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mec
> Companies such as Piaggio apply process operations. List the four steps in accounting for production activity in a reporting period (for process operations).
> Arctic Cat produces snowmobiles for sale. Identify some of the variable and fixed product costs associated with that production. [Hint: Limit costs to product costs.]
> Arctic Cat produces snowmobiles with a multiple process production line. Identify and list some of its production processing steps and departments.
> In process costing, the process is analyzed first and then a unit measure is computed in the formof equivalent units for direct materials, direct labor, overhead, and all three combined. The same analysis applies to both manufacturing and service process
> How can Piaggiouse variable costing to help better understand its operations and to make better pricing decisions?
> An accounting professional requires at least two skill sets. The first is to be technically competent. Knowing how to capture, manage, and report information is a necessary skill. Second, the ability to assess manager and employee actions and biases for
> Each of two similar companies has sales of $20,000 and total costs of $15,000 for a month. Company A’s total costs include $10,000 of variable costs and $5,000 of fixed costs. If Company B’s total costs include $4,000 of variable costs and$11,000 of fixe
> Are the journal entries that match cost flows to product flows in process costing primarily the same or much different than those in job order costing? Explain.
> How does assuming that operating activity occurs within a relevant range affect cost-volume-profit analysis?
> Laffer Lumber produces bagged bark for use in landscaping. Production involves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for October. The company’s revenue
> Access and review the entrepreneurial information at Business Owner’s Toolkit [Toolkit.com]. Access and review its New Business Cash Needs Checklist under the Start Up menu bar or similarworksheets related to controls of cash and costs. Required Write a
> Widmer Watercraft’s predetermined overhead rate for year 2013 is 200% of direct labor. Information on the company’s production activities during May 2013 follows. a. Purchased raw materials on credit, $200,000. b. Paid $126,000 cash for factory wages. c.
> What two arguments tend to justify classifying all costs as either fixed or variable even though individual costs might not behave exactly as classified?
> Describe how the following items are computed: a. Gross margin, and b. Contribution margin
> Describe the contribution margin ratio in layperson’s terms.
> After all labor costs for a period are allocated, what balance should remain in the Factory Payroll account?
> Are there situations where Polariscan use process costing? Identify at least one and explain it.
> Explain a hybrid costing system. Identify a product or service operation that might well fit a hybrid costing system.
> Grand Garden is a luxury hotel with 150 suites. Its regular suite rate is $250 per night per suite. The hotel’s cost per night is $140 per suite and consists of the following. Variable direct labor and materials cost . . . . . . . . . . . . . . . . . .
> How do step-wise costs and curvilinear costs differ?
> Refer to Vijay Company’s data in QS 6-4. Compute its production cost per unit under variable costing.
> Refer to the information in Exercise 4-6 to answer the following requirements. Information from 4-6: Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical sy
> Piaggiois thinking of expanding sales of its most popular scooter model by 65%. Should we expect its variable and fixed costs for this model to stay within the relevant range? Explain.
> Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for its first year of operations follows. Sales (80,000 units 3 $50 per unit) . . . . . .
> What is a cost object?
> Polaris offers extended service contracts that provide repair and maintenance coverage over its products. As you complete the following requirements, assume that the Polaris services department uses many of Polaris’s existing resources such as its facili
> D’Souza Company sold 10,000 units of its product at a price of $80 per unit. Total variable cost is $50 per unit, consisting of $40 in variable production cost and $10 in variable selling and administrative cost. Compute the manufacturing (production) ma
> Access and review Piaggio’s Website (www.piaggio.com) to answer the following questions. Required 1. Do you believe that Piaggio’s managers use single product CVP analysis or multiproduct break-even analysis? Explain. 2. How does the addition of a new p
> A recent annual report for McDonald’s reports the following operating income for its United States and APMEA (Asia-Pacific, Middle East, and Africa) geographic segments: Required1. Is operating income growing faster in the United Stat
> Chem-Melt produces and sells an ice-melting granular used on roadways and sidewalks in winter. The company annually produces and sells about 300,000 lbs of its granular. In its ten-year history, the company has never reported a net loss. Because of this
> Multiproduct break-even analysis is often viewed differently when actually applied in practice. You are to visit a local fast-food restaurant and count the number of items on the menu. To apply multiproduct break-even analysis to the restaurant, similar
> Is it possible to have under- or overapplied overhead costs in a process cost accounting system? Explain.
> Following are activities in providing medical services at Healthsmart Clinic. A. Registering patients B. Cleaning beds C. Stocking examination rooms D. Washing linens E. Ordering medical equipment F. Heating the clinic G. Providing security services H.
> E’Lonte Company began operations this year. During this first year, the company produced 300,000 units and sold 250,000 units. Its income statement under absorption costing for its first year of operations follows. Additional Informat
> Diaz Company reports the following variable costing income statement for its single product. Thiscompany’s sales totaled 50,000 units, but its production was 80,000 units. It had no beginning finished goods inventory for the current per
> Labor costs of an auto repair mechanic are seldom based on actual hours worked. Instead, the amount paid a mechanic is based on an industry average of time estimated to complete a repair job. The repair shop bills the customer for the industry average am
> Assume that a company produces a single product by processing it first through a single production department. Directlabor costs flow through what accounts in this company’s process cost system?
> Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made from components shaped in the fabricating department and assembled in its assembly department. Information related to the 35,000
> Both Polaris and Arctic Cat sell motorized vehicles, and each of these companies has a different product mix. Required1. Assume the following data are available for both companies. Compute each company’s break-even point in unit sales.
> The usefulness of a single plantwide overhead rate is based on two assumptions. What are those assumptions?
> Refer to the information in Exercise 4-9. Information from Exercise 4-9: Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Exp
> Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000 rackets and sold 4,900. Each racket was sold at a price of $90. Fixed overhead costs are $78,000 and fixed selling and administrative costs are $65,200. T
> After reading an article about activity-based costing in a trade journal for the furniture industry,Adria Lopez wondered if it was time to critically analyze overhead costs at Success Systems. In a recent month, Adria found that setup costs, inspection c
