Can someone please help me fill this out?
Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15. Arseniq presents the following data for the years 2016 and 2017:
2016 2017
Units of XT15 produced and sold 50,000 52,500
Selling price $500 $550
Direct materials (square feet) 150,000 153,750
Direct materials costs per square foot $50 $55
Manufacturing capacity in units of XT15 62,500 62,500
Total conversion costs $6,250,000 $6,875,000
Conversion costs per unit of capacity $100 $110
Selling and customer-service capacity (customers) 150 150
Total selling and customer-service costs $2,250,000 $2,343,750
Selling and customer-service capacity cost per customer $15,000 $15,625
Arseniq produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Arseniq had 140 customers in 2016 and 145 customers in 2017.
Income
Statement
Amounts
in 2016
Revenue and
Cost Effects
of Growth
Component
in 2017
Revenue and
Cost Effects of
Price-Recovery
Component
in 2017
Cost Effect of
Productivity
Component
in 2017
Income
Statement
Amounts
in 2017
Revenues ($)
Direct Materials (Variable)
Conversion costs (Fixed)
Selling and customer service costs (Fixed)
Operating income
Can someone please help me fill this out?
Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15. Arseniq presents the following data for the years 2016 and 2017:
2016 2017
Units of XT15 produced and sold 50,000 52,500
Selling price $500 $550
Direct materials (square feet) 150,000 153,750
Direct materials costs per square foot $50 $55
Manufacturing capacity in units of XT15 62,500 62,500
Total conversion costs $6,250,000 $6,875,000
Conversion costs per unit of capacity $100 $110
Selling and customer-service capacity (customers) 150 150
Total selling and customer-service costs $2,250,000 $2,343,750
Selling and customer-service capacity cost per customer $15,000 $15,625
Arseniq produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Arseniq had 140 customers in 2016 and 145 customers in 2017.
| Income Statement Amounts in 2016 | Revenue and Cost Effects of Growth Component in 2017 | Revenue and Cost Effects of Price-Recovery Component in 2017 | Cost Effect of Productivity Component in 2017 | Income Statement Amounts in 2017 | |
| Revenues ($) | |||||
| Direct Materials (Variable) | |||||
| Conversion costs (Fixed) | |||||
| Selling and customer service costs (Fixed) | |||||
| Operating income |
Related questions
Case Study 1:
Zhivago Brands Ltd makes a special-purpose horse and dog rugsewing machine, Multiweaver (MW), used in the textile industry. Inearly 2015, Zhivago Brands Ltd designed the MW machine with thestrategic purpose of being distinct from its competitors. From thefeedback received at trade shows, the MW machine has been generallyregarded as a superior machine to others in the market. ZhivagoBrands Ltd presents the following performance for its accountingyears 1 January 2016 to 30 December 2016 as well as 1 January 2017to 30 December 2017.
Table 1 รขยย Performance Details For 2-YearPeriod | 2016 | 2017 |
Units of MW produced and sold | 300 | 315 |
Selling price | $60,000 | $63,000 |
Direct materials (kilograms) | 450,000 | 465,000 |
Direct materials cost per kilogram | $13.20 | $14.03 |
Manufacturing capacity in units of | 375 | 375 |
Total conversion costs | $3,000,000 | $3,037,500 |
Conversion cost per unit of capacity | $12,000 | $12,150 |
Customer number capacity for selling and customer-service | 150 | 143 |
Total selling and customer-service costs | $1,500,000 | $1,410,750 |
Selling and customer-service capacity cost per customer | $15,000 | $14,850 |
Details of activity levels and costs included inabove figures | 2016 | 2017 |
Production staff training costs | $16,500 | $20,500 |
Order and checking costs for returning materials tosuppliers | $1,350 | $340 |
Late delivered penalty of MW delays caused by suppliers | $1,600 | $410 |
table 2- Measures of activitylevels | 2016 | 2017 |
Turnover of staff numbers | 3 | 5 |
Number of staff training hours | 125 | 135 |
Number of late delivered of MW | 6 | 2 |
Number of times faulty materials returned to suppliers | 9 | 2 |
Number of new customers | 56 | 21 |
Number of repeat order purchases by existing customers | 3 | 4 |
Number of suggestions from employees | 12 | 26 |
Zhivago Brands Ltd produces no defective machines but it didexperience some material quality issues from its suppliers. Itwants to reduce direct materials usage per MW machine in2017. Conversion Costs in each year depending on productioncapacity defined in terms of MW units that can be produced, not theactual units produced. Selling and customer-service costs depend onthe number of customers that Zhivago Brands can support, not theactual number of customers it serves. Zhivago Brandshas75customers in 2016 and 80 customers in 2017.
Required
1. Identify the business strategy adopted by ZhivagoBrands and explain briefly how you reached your decision on thetype of business strategy adopted. 2. Calculate the GrowthComponent analysis of strategic profitabilityanalysis.
(Include whether Favourable or Unfavourable for Qs 2 to5).
3. Calculate the Price-Recovery component of strategicprofitability analysis.
4. Calculate the productivity component of strategicprofitability analysis.
5. Calculate the variance in operating profit forZhivago Brands Ltd for the 2016-2017 accounting years.
6. Provide one measure from any of the above tables foreach of the four Balanced Scorecard perspectives. Relate yourmeasure to its perspective.
