Discuss the profitability of the shaker run golf club

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Reference no: EM131764200

Preparing an Action Analysis Report using Excel

Fairway Golf Corporation produces private label golf clubs for pro shops throughout North America.  The company uses activity-based costing to evaluate the profitability of serving its customers.  This analysis is based on categorizing the company's costs as follows, using the ease of adjustment color coding scheme.

 

Ease of Adjustment Code

Direct Materials

Green

Direct Labor

Yellow

Indirect Labor

Yellow

Factory Equipment Depreciation

Red

Factory administration

Red

Selling & general wages and salaries

Red

Selling & administrative depreciation

Red

Marketing expenses

Yellow

Management would like to evaluate the profitability of a particular customer - Shaker Run Golf Club of Lebanon, Ohio.  Over the last twelve months this customer submitted one order for 100 golf clubs that had to be produced in four batches due to differences in product labeling requested by the customer.  Summary data concerning the order appear below.

Number of clubs

100

Number of orders

1

Number of batches

4

Direct labor-hours per club

.3

Selling price per club

$50.00

Direct materials cost per club

$29.50

Direct labor rate per hour

$20.50

A cost analyst working in the controller's office at the company has already produced the action analysis cost matrix for the Shaker Run Golf Club that appears below:

 

Supporting Direct Labor

Batch

Processing

Order Processing

Customer Service

Total

Activity

30 DL Hours

4 batches

1 order

1 customer

 

Manufacturing Overhead:

 

 

 

 

 

  Indirect Labor

mce_markernbsp; 35.40

mce_markernbsp; 53.70

mce_markernbsp;   6.80

mce_markernbsp;   0.00

mce_markernbsp;   95.90

  Factory equip depreciation

  102.80

         .90

      0.00

      0.00 

    103.70

  Factory Administration

     18.50

         .50

    12.00

  228.00

    259.00

Selling & administration OH:

 

 

 

 

 

  Wages & salaries

      11.00

     0.00

    36.00

    382.00

    429.00

  Depreciation

        0.00

     0.00

      6.00

      24.00

      30.00

  Marketing expenses

    117.70

     0.00

    54.00

    369.00

    540.70

Total

$  285.40

$ 55.10

$ 114.80

$1003.00

$1458.30

REQUIRED:

Prepare an action analysis report showing the profitability of the Shaker Run Golf Club.  Include direct materials and direct labor hour costs in the report.  Use Excel, save it to your desktop and then upload and submit your assignment.

Reference no: EM131764200

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