Managerial Accounting Case 14-62 Write Up
Managerial Accounting and Control
Decision Making:
Relevant Costs and Benefits
Case 14-62
Submited to:
Prof. Virgilio c. Avila
Submitted by:
Roy Kondoy
Shella Faye
Background of the Study
Sportway Corporation
Sportway is a wholesale distributor supplying a wide range of moderately priced sports equipment to large chain stores
Products: 60% purchased, 40% manufactured
The company has a Plastics Department that is currently manufacturing molded fishing tackle boxes
Sportway is able to manufacture and sell 8,000 tackle boxes annually, making full use of its direct-labor capacity at available work stations
Bo Vonderweidt, the production manager, wanted to put forward his suggestion to add a new product line, skateboards
Meg Thomas, the company president, is not sure about is whether the skateboard line will be better for them than their tackle boxes.
The selling price and costs associated with Sportway’s tackle boxes are as follows:
Selling price per box ………………………………….. $86.00
Costs per box: Molded plastic box …………………………… $ 8.00 Hinges, latches, handle …………………….. 9.00 Direct labor ($15.00 per hour) …………. 18.75 Manufacturing overhead …………………. 12.50 Selling and administrative cost …………. 17.00 65.25
Profit per box ………………………………………………. $20.75
Sportway’s sales manager believes the firm could sell 12,000 tackle boxes if it had sufficient manufacturing capacity
The company has looked into the possibility of purchasing the tackle boxes for distribution
Maple Products would be able to provide up to 9,000 tackle boxes per year at a price of $68.00
Bo Vonderweidt, Sportway’s production manager, concludes that the company could make better use of its Plastics Department by manufacturing skateboards
Vonderweidt believes that Sportway could expect to sell 17,500 skateboards annually at a price of $45.00 per skateboard
Vonderweidt worked out the following estimates with the assistant
Decision Making:
Relevant Costs and Benefits
Case 14-62
Submited to:
Prof. Virgilio c. Avila
Submitted by:
Roy Kondoy
Shella Faye
Background of the Study
Sportway Corporation
Sportway is a wholesale distributor supplying a wide range of moderately priced sports equipment to large chain stores
Products: 60% purchased, 40% manufactured
The company has a Plastics Department that is currently manufacturing molded fishing tackle boxes
Sportway is able to manufacture and sell 8,000 tackle boxes annually, making full use of its direct-labor capacity at available work stations
Bo Vonderweidt, the production manager, wanted to put forward his suggestion to add a new product line, skateboards
Meg Thomas, the company president, is not sure about is whether the skateboard line will be better for them than their tackle boxes.
The selling price and costs associated with Sportway’s tackle boxes are as follows:
Selling price per box ………………………………….. $86.00
Costs per box: Molded plastic box …………………………… $ 8.00 Hinges, latches, handle …………………….. 9.00 Direct labor ($15.00 per hour) …………. 18.75 Manufacturing overhead …………………. 12.50 Selling and administrative cost …………. 17.00 65.25
Profit per box ………………………………………………. $20.75
Sportway’s sales manager believes the firm could sell 12,000 tackle boxes if it had sufficient manufacturing capacity
The company has looked into the possibility of purchasing the tackle boxes for distribution
Maple Products would be able to provide up to 9,000 tackle boxes per year at a price of $68.00
Bo Vonderweidt, Sportway’s production manager, concludes that the company could make better use of its Plastics Department by manufacturing skateboards
Vonderweidt believes that Sportway could expect to sell 17,500 skateboards annually at a price of $45.00 per skateboard
Vonderweidt worked out the following estimates with the assistant