# A company has four related product lines. Since they are aimed at different segments of the market, the company

A company has four related product lines. Since they are aimed at different segments of the market, the company

Don't use plagiarized sources. Get Your Custom Essay on
A company has four related product lines. Since they are aimed at different segments of the market, the company
Just from \$13/Page

calculates separate P&L statements for each of these product lines. There are certain machining and assembly centers that work on products for each of the lines. OH costs from each of those centers are allocated to product cost of each product manufactured using rationally computed cost drivers taking total costs of each center at capacity divided by units of the driver available at capacity and then applied to each unit based on units of the driver used. (Basically an ABC approach.) The company also has a significant amount of sales and marketing and administrative OH, much of it fixed and shared by all four product lines, and which is allocated to the respective product lines based roughly on relative sales volume.

The company determines the following key numbers for each line:

Product A           Product B            Product C            Product D           Company Total

Total sales          \$25,000,000       \$20,000,000       \$15,000,000       \$10,000,000       \$70,000,000

Mfg.Cost Alloc  \$5,000,000          \$4,000,000          \$3,000,000          \$2,000,000          \$14,000,000

Corp OH Alloc   \$4,000,000          \$3,000,000          \$2,000,000          \$1,000,000          \$10,000,000

Other Costs       \$18,000,000       \$12,000,000`      \$8,000,000          \$4,000,000          \$42,000,000

Net Income       (\$2,000,000)      \$1,000,000          \$2,000,000          \$3,000,000          \$4,000,000

Senior management decides that the Product A Line should be discontinued to eliminate the loss, and thus increase net income. A production analyst who recently graduated from the graduate business program and excelled in the managerial accounting class urged them to reconsider, arguing forcefully that this move would very likely reduce corporate net income. In fact, it would probably cause another of the lines (probably B) to then become a money loser, leading to its elimination, and subsequently making the problem even worse!

Who is right, the senior management or the analyst? Explain in detail what would most likely occur, how, and why. Use numbers to illustrate your answer, but also explain the logic of what would happen. Discuss both the shared manufacturing costs and the corporate overhead.

1. Who is right, the senior management or the analyst?Answer:Analyst is right2. what would most likely occur, how, whya) Computation of profit under senior management suggetion.PARTICULARS…

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.