COMP26-1 (similar to Question F - X Dennis Dawson, majo accountant, you've bee Requirements mpany's ma Read the requirement orked a. Prepare a differential analysis to show whether Division B should drop the T205 product line. b. Whalieuuocommondationtethe mananos.ofDadelon R Requirement 1. Divis The division's volume to earn a 10% return o nt Sco are $1.35 pe nagement tea 3. Divis prod this d X nake Data Table pts: 1a. What is Division A homew After Submis plant Per Unit can Less: a. l K707 G582 b. F Target full product cos Sales price 88 S 56 4. Divis at a 22 COMP26 Variable costs cost end d $8,30 estim uses 67 S 34 Contribution margin the D Contribution margin ratio 76.1% 60.7% what to a. b. C Print Done c. L Frowoo N acrpiancompare mIT comp ins. STeqo raerorre d. Division D must rank the plans and make a recommendation to Dawson's top management team for the best plan. Which expansion plan should Division D choose? Why? course (ACCT Choose from any list d s of Use | Priv Print Done 22 parts remaining Answer pmilar tol Requirements ts 1. Division A of Dawson, Inc. has $4,800,000 in assets. Its yearly fixed costs are isi ne $767,500, and the variable costs of its product line are $1.35 per unit. The division's volume is currently 550,000 units Competitors offer a similar product, at the same quality, to retailers for $3.60 each. Dawson's management team wants to eam a 10% return on investment on the division's assets a. What is Division A's target full product cost? b. Given the division's current costs, will Division A be able to achieve its target profit? c. Assume Division A has identified ways to cut its variable costs to $1.20 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the division to achieve its target profit? d. Division A is considering an aggressive advertising campaign strategy to differentiate its product from its competitors. The division does not expect volume to be affected, but it hopes to gain more control over pricing. If Division A has to spend $105,000 next year to advertise and its variable costs continue to be $1.20 per unit, what will its cost-plus price be? Do you think Division A will be able to sell its product at the cost-plus price? Why or why not? 2. The division manager of Division B received the following operating income data for the past year BEB (Click the icon to view the Division B operating income data.) The manager of the division is surprised that the T205 product line is not profitable. The division accountant estimates that dropping the T205 product line will decrease fixed cost of goods sold by $78,000 and decrease fixed selling and administrative expenses by $8,000 a. Prepare a differential analysis to show whether Division B should drop the T205 product line b. What is your recommendation to the manager of Division B? 3. Division C also produces two product lines. Because the division can sell all of the product it can produce, Dawson is expanding the plant and needs to decide which product line to emphasize. To make Tmo n A ct cos n any list d Print Done ining Answ Question H milar - X Data Table mpany's man Division B of Dawson, Inc. Income Statement are $1.35 per nagement team isi e n ol For the Year Ended December 31, 2018 Product Line A T205 B179 Total Net Sales Revenue S 350,000 $ 390,000 $ 740,000 Cost of Goods Sold Variable 41,000 46,000 87,000 t cos 66,000 Fxed 240,000 306,000 281,000 Total Cost of Goods Sold 112,000 393,000 Gross Profit 278,000 69,000 347,000 Selling and Administrative Expenses Variable 65,000 78,000 143,000 Fixed 44,000 24,000 68,000 Total Selling and Administrative Expenses 109,000 102,000 211,000 (40,000) Operating Income (Loss) 176,000 $ 136,000 any listd Print Done ing Answer HW Sc 1 of 1 (0 complete) milar tol X Requirements a. Prepare a differential analysis to show whether Division B should drop the T205 product line b. What is your recommendation to the manager of Division B? 3. Division C also produces two product lines. Because the division can sell all of the product it can produce, Dawson is expanding the plant and needs to decide which product line to emphasize. To make this decision, the division accountant assembled the following data: EE(Click the icon to view the Division C product data.) After expansion, the factory will have a production capacity of 4,100 machine hours per month. The plant can manufacture either 25 units of K707s or 60 units of G582s per machine hour a. Identify the constraining factor for Division C b. Prepare an analysis to show which product line to emphasize 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8,500,000. Expected annual net cash inflows are $1,550,000, with zero residual value at the end of 10 years. Under Plan B, Division D would begin producing a new product at a cost of $8,300,000. This plan is expected to generate net cash inflows of $1,120,000 per year for 10 years, the estimated useful life of the product line. Estimated residual yalue for Plan B is $1,000,000. Division D uses straight-line depreciation and requires an annual retuin of 10 %. a Compute the payback, the ARR, the NPV, and the profitability index for both plans. b. Compute the estimated IRR of Plan A c. Use Excel to verify the NPV calculations in Requirement 4(a) and the actual IRR for the two plans. How does the IRR of each plan compare with the company's required rate of retun? d. Division D must rank the plans and make a recommendation to Dawson's top management team for the best plan. Which expansion plan should Division D choose? Why? ar nag A cos ny list d Print Done ng Answer HW Score: 0%, 0 of 100 pts 1(0 complete) COMP26-1 (similar to) Question Help Dennis Dawson, majority stockholder and president of Dawson, Inc., is working with his top managers on future plans for the company As the company's managerial accountant, you've been asked to analyze the following situations and make recommendations to the management team Read the fequirements Requirement 1. Division A of Dawson, Inc. has $4,800,000 in assets. Its yearly foxed costs are $767,500, and the variable costs of its product line are $1.35 per unit The division's volume is currently 550,000 units. Competitors offer a similar product, at the same quality, to retailers for $3.60 each. Dawson's management team wants to eam a 10% return on investment on the division's assets 1a. What is Division A's target full product cost? N Less Target full product cost 6 to Choose from any list or enter any number in the input fields and then click Check Answer ra Pri 22 femaining Clear All Check