Analyze the effect on profit of dropping accessories

Assignment Help Managerial Accounting
Reference no: EM13957745

Jordan Walken owns and operates an electronics store in Seattle, Washington. His accountant has prepared a product line income statement that is reproduced below. (Jordan's two lines are MP3 players and accessories.) In preparing the income statement, the accountant allocated all common costs, including rent, Jordan's salary and the salary of his two assistants, utilities, and other common costs based on relative sales. His reason: Each product line needs to cover its share of common costs.0
In light of this report, Jordan is considering eliminating accessories and concentrating solelyon the sale of MP3 players (although he does not expect an increase in MP3 player sales).

1958_259-B-M-A-D-M (1038).png

Required:

Analyze the effect on profit of dropping accessories. Then write a paragraph explaining the role of common costs in your analysis and how allocation of common costs can lead to the cost allocation death spiral.

Reference no: EM13957745

Questions Cloud

Explain what a gap analysis : Explain what a “gap analysis” is including how gaps are defined and measured. Be sure to address how gap analysis relates to needs, requirements, design, project scoping, evaluation and evaluation planning.
Relationship in cause analysis and requirements definition : What is the relationship between a cause analysis and a requirements definition (often a document)? How does one impact the other? How does information flow between the two? Also explain what a “cause analysis” is including what information is needed..
What is the probability that julio will win : Three friends play a game of darts until one of the 3 is declared a winner. It is known that Jan is twice as likely to win as Julio, and Jean is only half as likely to win as Julio.
Decide between two cost structures : You are currently trying to decide between two cost structures for your business: one that has a greater proportion of short-term fixed costs and another that is more heavily weighted to variable costs. Estimated revenue and cost data for each altern..
Analyze the effect on profit of dropping accessories : Analyze the effect on profit of dropping accessories. Then write a paragraph explaining the role of common costs in your analysis and how allocation of common costs can lead to the cost allocation death spiral.
Receivable using probability proportional to size sampling : You are the auditor for a company and need to review the company's accounts receivable using probability proportional to size (PPS) sampling. In addition, the board of directors has requested that you and your team present an explanation of your P..
Explain the relationship between work breakdown structures : Explain the relationship between work breakdown structures (WBS), network diagrams, and risk management. Give an example of each and backup your data using credible research from online resources. Be sure to follow up your suggestions with data from ..
Observing processes in a business : Using any business as an example, or by observing processes in a business, or by talking to someone who works, you should produce information about the 6 steps. Provide an introduction of any random company, industry and your association. Assess the ..
Draw a probability tree and explain it : If the Diamond is drawn, the Diamond is set aside and not replaced (so that when the game continues there are only 3 cards in the hand).

Reviews

Write a Review

Managerial Accounting Questions & Answers

  What are the direct material and direct labour price

Calculate a) net book value of the equipment at the end of the third year using the straight-line method of depreciation; and b) depreciation expense for the second year using the double-declining balance method of depreciation.

  Crc offers racqueball and other physical fitness facilities

crc offers racqueball and other physical fitness facilities to its mbrs. there are 4 of these clubs in the metro area.

  Fill in the missing information to determine

Fill in the missing information to determine the sales and purchases budgets for 2012.

  Expense for departments are allocated to mediterranean

Expense for departments are allocated to Mediterranean and Trans-Atlantic cruises - The sea miles logged are 6,000,000 for the Mediterranean and 18,000,000 for the Trans

  Direct materials versus the completion percentage

If we were to look at an incomplete unit at the end of any given department, would we expect to see a difference in the completion percentage for direct materials versus the completion percentage for conversion costs?

  Question consider the following potential investment which

question consider the following potential investment which has the same risk as the firms other projectstimecash

  Identify the major business and financial risks

Identify the major business and financial risks such as interest rate risk, foreign exchange risk, credit, commodity, and operational risks.

  Liabilitiesthe following items are extracted in a random

liabilitiesthe following items are extracted in a random order from the accounting records of mst corp for the period

  Credited using a process costing system

Credited using a process costing system. Assume perpetual inventory records are maintained. Include written explanations with your journal entries and use XXX in place of dollar amounts.

  Determine the best sales mix and rank the services

Determine the best sales mix and Rank the services offered in order of their profitability and what additional amount of total contribution margin would be generated if your recommendation is accepted?

  How much net operating income would increase

A study by the sales manager discloses that a 15% increase in the selling price would reduce unit sales by 10%. If her proposal is adopted, how much net operating income would increase?

  Prepare the operating cash flow section of goodly

Prepare the operating cash flow section of Goodly's statement of cash flows using the indirect method.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd