Last year some of the primary manufactures of computers

Reference no: EM13596528

Bedner & Flott Inc. manufactures ergonomic devices for computer users. Some of their more popular products include glare screens (for computer monitors), keyboard stands with wrist rests, and carousels that allow easy access to discs. Over the past 5 years, they experienced rapid growth, with sales of all products increasing 20% to 50% each year.

Last year, some of the primary manufactures of computers began introducing new products with some of the ergonomic designs, such as glare screens and wrist rests, already built in. As a result, sales of Bedner & Flott's accessory devices have declined somewhat. The company believes that the disc carousels will probably continue to show growth, but that the other products will probably continue to decline. When the next year's budget was prepared, increases were built in to research and development so that replacement products could be developed or the company could expand into some other product line. Some product lines being considered are general-purpose ergonomic devices including back supports, foot rests, and slopped writing pads.

The most recent results have shown that sales decreased more than was expected for the glare screens. As a result, the company may have a shortage of funds. Top management has therefore asked that all expenses be reduced 10% to compensate for these reduced sales. Summary budget information is as follows.

Direct materials $240,000
Direct labor 110,000
Insurance 50,000
Depreciation 90,000
Machine repairs 30,000
Sales salaries 50,000
Office salaries 80,000
Factory salaries (indirect labor) 50,000
Total $700,000

Instructions:

Using the information above, answer the following questions.

(a) What are the implications of reducing each of the costs? For example, if the company reduces direct materials costs, it may have to do so by purchasing lower-quality materials. This may affect sales in the long run.

(b) Based on your analysis in (a), what do you think is the best way to obtain the $70,000 in cost savings requested? Be specific. Are there any costs that cannot or should not be reduced? Why?

Reference no: EM13596528

Questions Cloud

Emmette corporation uses an activity-based costing system : emmette corporation uses an activity-based costing system with three activity cost pools. the company has provided the

If sales totaled 800000 for the year 80000 units at 1000 : 1.if sales totaled 200000 for the current year 10000 units at 20 each and planned sales totaled 187500 12500 units at

Which of the following is not a factory overhead allocation : 1.which of the following is not a factory overhead allocation method? single plantwide rate multiple departmental rates

National products corporation participates in a highly : national products corporation participates in a highly competitive industry. in order to meet this competition and

Last year some of the primary manufactures of computers : bedner amp flott inc. manufactures ergonomic devices for computer users. some of their more popular products include

Danner farm supply company manufactures and sells a : danner farm supply company manufactures and sells a pesticide called snare. the following data are available for

Suppose georgette earns 13 an hour installing : suppose georgette earns 13 an hour installing transistorized digital chiops in electronic calculators. if you were

A manufacturing company applies factory overhead based on : a manufacturing company applies factory overhead based on direct labor hours. at the beginning of the year it estimated

Discount sales sells some used store fixtures the : discount sales sells some used store fixtures. the acquisition cost of the fixtures is 12500 the accumulated

User Account

All Pages