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  • Camelback Management Accounting

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    nitinr18
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    The document presents cost and pricing information for 4 products - A, B, C, and D. It analyzes the standard and actual costs of production as well as the markups and profits for each product. It identifies that Product C has a markup below 25% and should be discontinued. Several solutions are then presented analyzing the allocation rates and proposing different cost pools and their impacts on standard costs and profits for the products.

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    Case solution to camelback communication in management accounting

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    The document presents cost and pricing information for 4 products - A, B, C, and D. It analyzes the standard and actual costs of production as well as the markups and profits for each product. It identifies that Product C has a markup below 25% and should be discontinued. Several solutions are then presented analyzing the allocation rates and proposing different cost pools and their impacts on standard costs and profits for the products.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    1K views4 pages

    Camelback Management Accounting

    Uploaded by

    nitinr18
    The document presents cost and pricing information for 4 products - A, B, C, and D. It analyzes the standard and actual costs of production as well as the markups and profits for each product. It identifies that Product C has a markup below 25% and should be discontinued. Several solutions are then presented analyzing the allocation rates and proposing different cost pools and their impacts on standard costs and profits for the products.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    CAMELBACK COMMUNICATIONS INC

    1Product

    Material
    Labor
    Allocated Cost
    Standard Cost
    40% mark-on
    Price

    5
    5
    10.36
    20.36
    8.14
    28.50

    10
    15
    31.08
    56.08
    22.43
    78.512

    5
    10
    20.72
    35.72
    14.29
    50.01

    Using Actual Production


    Cost
    Standard Cost
    Mark-on
    Selling Price
    Profit %

    27.5
    11
    38.5
    18.14

    42.5
    17
    59.5
    3.42

    35
    14
    49
    13.28

    Markup(Profit/Cost)
    in %

    89.10

    6.10

    37.18

    For B price charged would be $28.50


    For C price charged would be $78.51
    For D price charged would be $50.01

    Since Mark-up for product C is below 25%, it must be discontinued


    Solution 2

    Material
    Labour
    Allocated Cost
    Standard Cost
    Mark on
    SP
    ISP
    Profit
    Markup %

    B
    D
    5
    5
    5
    10
    15.00
    30.00
    25.00
    45.00
    10
    18
    35.00
    63.00
    38.5
    49
    13.50
    4.00
    54 8.888889

    D will be dropped

    Material

    B
    5

    Labour
    Allocated Cost
    Standard Cost
    Mark on
    SP
    ISP
    Profit
    Markup %

    5
    30.00
    40.00
    16
    56.00
    38.5
    -1.50
    -3.75

    B will be dropped
    Solution 3
    The allocation rate is increasing because of a shrinking denominator (no of labour
    hours) and no similar behaviour of the numerator (Fixed overhead+ variable overhead).
    Consequently, the standard costs will rise, squeezing mark-ups, as the industry selling
    prices remain constant.
    Solution 4
    variable oh
    fixed oh

    35000
    45000

    labour hours
    allocation rate

    12000
    2.92

    Product
    Material
    Labour
    Fixed Cost
    Allocated cost
    Standard Cost
    ISP
    Profit

    Markup %

    15
    30
    10
    17.50
    72.50
    98
    25.50

    5
    5
    10
    2.92
    22.92
    38.5
    15.58

    35.17241379

    68

    10
    15
    12.5
    8.75
    46.25
    59.5
    13.25
    28.6486486
    5

    5
    10
    12.5
    5.83
    33.33
    49
    15.67
    47

    Solution 5
    Product

    Material
    Labour
    Variable OH
    Allocated cost
    Standard Cost
    ISP
    Profit
    Markup %

    15
    30
    15
    22.50
    82.50
    98
    15.50

    5
    5
    7.5
    3.75
    21.25
    38.5
    17.25

    18.78787879

    81.17647059

    10
    15
    5
    11.25
    41.25
    59.5
    18.25
    44.2424242
    4

    5
    10
    7.5
    7.50
    30.00
    49
    19.00
    63.3333333
    3

    Solution 6
    Pool A+B

    Pool C+D

    variable oh
    fixed oh
    labour hours
    allocation rate

    Product
    Material
    Labour
    Allocated cost
    Standard Cost
    ISP
    Profit
    Markup %

    22500
    20000

    12500
    25000

    7000
    6.07

    5000
    7.50

    15
    30
    36.43
    81.43
    98
    16.57

    5
    5
    6.07
    16.07
    38.5
    22.43

    20.35087719

    139.5555556

    10
    15
    22.50
    47.50
    59.5
    12.00
    25.2631578
    9

    D
    5
    10
    15.00
    30.00
    49
    19.00
    63.3333333
    3

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