Company should get out of the golf club business

Assignment Help Managerial Accounting
Reference no: EM13935847

Hawthorne Golf, the maker of a sought after set of golf dubs, was formed in 2009.The selling price for each golf club set is $850, variable production costs are $450 per unit, fixed production costs are $1,015,000 per year, and fixed selling and administrative costs are $1,147,500 per year. Data below indicate net income for 2009 2011 under kill costing.In 2009 and 2010, Milo Hawthorne, Jr., was the president of Hawthorne Golf. The board of directors was generally pleased with the company's performance under his leadership the company hit the break-even point in its first year of operation and had a modest profit in 2010. Milo quit at the end of 2010 and went on to buy a golf course and open a pro shop. His replacement, Daryl Selmer, was apparently not as successful as Milo. Daryl argued that he was improving the company by getting rid of excess inventory, but the board noted that the company showed a Si 42.500 loss in the first year of his leadership.

Required:

a. Recalculate net income for all three years using variable costing.
b. Based on the limited information available, comment on the relative job performance of Milo and Daryl.
c. Note that under full costing, the company is showing a substantial loss in 2011. Based on the limited information available, does it appear that the company should get out of the golf club business?

Reference no: EM13935847

Questions Cloud

Based on the limited information available : Note that under kill costing, the company is showing a substantial loss in 2011. Based on the limited information available, does it appear that the company should get out of the tractor business?
Discuss metabolic requirements for growth of each microbe : Discuss the metabolic requirements for growth of each microbe and select one antibiotic (bacteria), antiviral (virus) or anti-fungal (fungi) agent, depending on the pathogens that you selected.
Discuss the role of the immune system in protecting the body : Discuss the role of the immune system in protecting the body from the pathogenic and non-pathogenic microbes selected in Module 1 and 2.
Write methods which display variables assigned values : write methods which display variables assigned values and operators results
Company should get out of the golf club business : Note that under full costing, the company is showing a substantial loss in 2011. Based on the limited information available, does it appear that the company should get out of the golf club business?
Which arguments supported peer-reviewed scientific research : Which arguments are supported with peer-reviewed scientific research? In your search, did you find regions in the US where diseases that were once rare have resulted in outbreaks in communities who are predominantly against vaccination?
Innovation report focuses on an industry : TOPIC: INNOVATION The industry innovation report (1500 words) focuses on an industry and identifies components and players (competitors) in innovation ecosystem, recent developments and future prospect.
Review methodologies for design & development : Investigate the requirements for the system and produce a Requirements Specification. Review methodologies for design & development and select the most appropriate
How gross profits might made less sensitive to value of euro : Calculate the percentage change in the gross profit based on a 10% increase in the value of the euro. Explain your result. Suggest how gross profits might be made less sensitive to the value of the euro.

Reviews

Write a Review

Managerial Accounting Questions & Answers

  What is medical associates cost of equity

What is Medical Associates cost of equity estimate according to the DCF method and what is the cost of equity estimate according to the CAPM?

  Barker inc. uses the weighted-average method

Barker Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company''s first processing department for a recent month.  Work in process, beginning: Units in process 1000 Stage of compl..

  Evaluate the net present value - npv of the lease

Genmed Hospital needs to replace its existing MRI scanning machine. The hospital is considering funding the purchase by means of a lease. The lease would run initially for 2 years at a cost of R450 000 per annum, payable at the of the year.

  Prepare journal entries to record the sale of the printers

Prepare the journal entries to record the sale of the printers and the related warranty cost, assuming that the accrual method is used. Actual warranty costs for 2002 were $8,500.

  Evaluate original decision to acquire the automated machine

Re-compute the predetermined rate assuming that the new machine will be installed and explain why the new predetermined overhead rate is higher (or lower) than the rate that was originally estimated for the year 2014

  Standard costing problem for petty petroleum

Petty Petroleum, Inc. uses various chemicals to manufacture its products. Variance data for last month for three primary chemicals used in production are as follows (F indicates a favorable variance; U indicates an unfavorable variance):

  What financial information would you think would be relevant

What financial information would you think would be relevant or irrelevant from the viewpoint of possible investors in this company

  Question on relevant costs

A copier company has been using same Copier A for 5 years. This copier can copy approximately 50 sheets a minute. The company has opportunity to purchase the new Copier B which can process approximately 60 sheets a minute.

  Conversion cycle and credit policy

Since easing the credit policy generally lengthens the collection period and worsens the aging schedule, why do firms ever ease their credit policies?

  Cash outflow for the repayment of bond liabilities

On January 1, 2013, Van Company had a balance of $800,000 in its Bonds Payable account. During 2013, Van issued bonds with a $300,000 face value.

  Determine the unit costs of production

Compute equivalent units of production for materials and for conversion costs - Determine the unit costs of production.

  Mr banner has recently contacted your accounting professor

mr. banner has recently contacted your accounting professor to find a replacement for his general manager and

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