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Re ovan: Informa! quired Identily some cost savings these companies might realize by reducing the number of items they sell or use in production. Be as specific as possible, and use your imagination Consider the additional information presented below, which is hypothetical. All dollar amounts are in thousands, unit amounts are not. Assume that Supervalu decides to eliminate one product line. Sugar-Bits, for one of its segments that currently produces three products. As a result, the following are expected to occur: (1) The number of units sold for the segment is expected to drop by only 40,000 because of the elimination of Sugar-Bits, since most customers are expected to purchase a Fiber Treats or Carbo-Crunch product instead. The shift of sales from Sugar-Bits to Fiber Treats and Carbo-Crunch is expected to be evenly split. In other words, the sales of Fiber-Treats and Carbo-Crunch will each increase by 100,000 units. (2) Rent is paid for the entire production facility, and the space used by Sugar-Bits cannot be sublet. (3) Utilities costs are expected to be reduced by $24,000, (1) All of the supervisors for Sugar-Bits were all terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch. (5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod- wa C wa Owne Plat Bumi who look unt Em Em ne.net 5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod. ucts. However, the company believes that as a result of eliminating Sugar-Bits it can dispose of equipment that has a remaining useful life of 5 years, and a projected salvage value of $20,000. Its current market value is $35.000. (6) Facility level costs will continue to be allocated between the product lines based on the num ber of units produced. Product Line Earnings Statements (Dollar amounts are in thousands) Fiber- Treats Sugar Bits Total Carbo- Crunch 480,000 $480,000 480,000 $480,000 240.000 $240,000 1,200,000 $1,200,000 Annual Costs of Operating Each Product Line Sales in units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous Total unit-level costs E 48,000 R 48,000 6,000 10,800 3.600 68.400 6,000 9,600 2.400 66,000 26,400 2,400 4,800 2.400 36.000 122.400 14,400 25.200 8,400 170.400 A Product-level costs: Supervisor salaries 4,800 3.600 1.200 9.600 Jersity Managerial Accounting: MBAS24_0323_10071 8 m Mariage Profile Messages Calendar wy u Unit 7 - 75.00 pts Questioni - M Save Assignment Submitted 1 (Analyzing inventory reductions at Supervalu) In a narrative format, answer all question presented in the case, ATC 6-1. Mention some ways other than cost cutting that will improve company operations. Click here to edit four answer Chat INTL 0 9 :38 SAMSUNG INICATE ATC 6-1 Business Application Case Analyzing inventory reductions at Supervalu Real-world companies often reduce the complexity of their operations in an attempt to increase prof. its. In late 2014 and early 2015 McDonald's Corporation announced a series of restructuring efforts it planned to undertake to improve profitability. One of these was to reduce the number of items of fered for sale in its restaurants. In October 2014, General Motors announced plans to reduce the number of vehicle production platforms on which it builds cars from 26 to four by 2025. In 2010, Supervalu, Inc., one of the largest grocery store companies in the United States, announced it was planning to reduce the number of different items it carries in its inventory by as much as 25 percent. Supervalu is one of the largest grocery store companies in the United States. Most of the planned reduction in inventory items at Supervalu was going to be accomplished by reducing the number of different package sizes rather than by reducing entire product brands. The new approach was intended to allow the company to get better prices from its vendors and to put more emphasis on its own store brands. Helena quired Identify some costs savings these companies might realize by reducing the number of items they sell or use in production. Be as specific as possible, and use your imagination. Consider the additional information presented below, which is hypothetical. All dollar amounts are in thousands, unit amounts are not. Assume that Supervalu decides to eliminate one product line. Su gar-Bits, for one of its segments that currently produces three products. As a result, the following are expected to occur: (1) The number of units sold for the segment is expected to drop by only 40,000 because of the elimination of Sugar-Bits, since most customers are expected to purchase a Fiber-Treats or Carbo-Crunch product instead. The shift of sales from Sugar-Bits to Fiber-Treats and Carbo-Crunch is expected to be evenly split. In other words, the sales of Fiber-Treats and Carbo-Crunch will each increase by 100,000 units. (2) Rent is paid for the entire production facility, and the space used by Sugar-Bits cannot be sublet. (3) Utilities costs are expected to be reduced by $24,000. () All of the supervisors for Sugar-Bits were all terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch. (5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod- ucts. However, the company believes that as a result of eliminating Sugar-Bits it can dispose of equipment that has a remaining useful life of 5 years, and a projected salvage value of $20,000. Its current market value is $35,000.B 161 Facilit doulence will continue to be al l hann the lines haced on the num (3) Utilities costs are expected to be reduced by S24.000, (4) All of the supervisors for Sugar-Bits were all terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch. (5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod ucts. However, the company believes that as a result of eliminating Sugar-Bits it can dispose of equipment that has a remaining useful life of 5 years, and a projected salvage value of $20,000. Its current market value is $35,000. R (6) Facility-level costs will continue to be allocated between the product lines based on the num, ber of units produced. Product-Line Earnings Statements (Dollar amounts are in thousands) Annual Costs of Operating Each Product Line Fiber Treats Carbo- Crunch Sugar- Bits Total 480,000 $480,000 1 480,000 $480,000 240,000 $240,000 1,200,000 $1,200,000 Sales In units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous 48,000 6,000 10,800 3,600 E 48,000 R6,000 9.600 2.400 26,400 2,400 4,800 2.400 122.400 14,400 25,200 8.400 Read Annual Costs of Operating Each Product Line Fiber- Treats Carbo- Crunch Sugar Bits Total 480,000 $480,000 480,000 $480,000 240,000 $240,000 1,200,000 $1,200,000 E 48.000 Sales in units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous Total unit-level costs 48,000 6,000 10,800 3,600 68,400 R6,000 9,600 2,400 66,000 26,400 2,400 4,800 2,400 36,000 122.400 14,400 25,200 8,400 170,400 4.800 3,600 1,200 9,600 1 48,000 Product-level costs: Supervisors' salaries Facility-level costs: Rent Utilities Depreciation on equipment Allocated companywide expenses Total facility-level costs Total product cost Profit on products 8 60,000 48,000 60,000 192,000 12,000 312,000 385,200 $ 94.800 192,000 2 12,000 7312,000 381,600 $ 98,400 24,000 30,000 96,000 6.000 156,000 193,200 $ 46,800 120,000 150,000 480,000 30.000 780,000 960.000 $ 240.000 Shipping and handling Miscellaneous Total unit-level costs 6,000 10,800 3,600 68,400 6,000 9,600 2,400 66,000 2.400 4,800 2,400 36,000 14.400 25.200 3,400 170.400 4,800 3,600 1,200 9,600 1 48,000 Product-level costs: Supervisors' salaries Facility-level costs: Rent Utilities Depreciation on equipment Allocated companywide expenses Total facility-level costs Total product cost Profit on products 48,000 60,000 192,000 12,000 312,000 385,200 $ 94,800 $ 60,000 192,000 2 12,000 312,000 381,600 $ 98,400 24,000 30,000 96,000 6,000 156,000 193,200 $ 46,800 120,000 150,000 480,000 30,000 780,000 960,000 $ 240,000 Prepare revised product-line earnings statements based on the elimination of Sugar-Bits. (Hint: It will be necessary to calculate some per-unit data to accomplish this.) Re ovan: Informa! quired Identily some cost savings these companies might realize by reducing the number of items they sell or use in production. Be as specific as possible, and use your imagination Consider the additional information presented below, which is hypothetical. All dollar amounts are in thousands, unit amounts are not. Assume that Supervalu decides to eliminate one product line. Sugar-Bits, for one of its segments that currently produces three products. As a result, the following are expected to occur: (1) The number of units sold for the segment is expected to drop by only 40,000 because of the elimination of Sugar-Bits, since most customers are expected to purchase a Fiber Treats or Carbo-Crunch product instead. The shift of sales from Sugar-Bits to Fiber Treats and Carbo-Crunch is expected to be evenly split. In other words, the sales of Fiber-Treats and Carbo-Crunch will each increase by 100,000 units. (2) Rent is paid for the entire production facility, and the space used by Sugar-Bits cannot be sublet. (3) Utilities costs are expected to be reduced by $24,000, (1) All of the supervisors for Sugar-Bits were all terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch. (5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod- wa C wa Owne Plat Bumi who look unt Em Em ne.net 5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod. ucts. However, the company believes that as a result of eliminating Sugar-Bits it can dispose of equipment that has a remaining useful life of 5 years, and a projected salvage value of $20,000. Its current market value is $35.000. (6) Facility level costs will continue to be allocated between the product lines based on the num ber of units produced. Product Line Earnings Statements (Dollar amounts are in thousands) Fiber- Treats Sugar Bits Total Carbo- Crunch 480,000 $480,000 480,000 $480,000 240.000 $240,000 1,200,000 $1,200,000 Annual Costs of Operating Each Product Line Sales in units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous Total unit-level costs E 48,000 R 48,000 6,000 10,800 3.600 68.400 6,000 9,600 2.400 66,000 26,400 2,400 4,800 2.400 36.000 122.400 14,400 25.200 8,400 170.400 A Product-level costs: Supervisor salaries 4,800 3.600 1.200 9.600 Jersity Managerial Accounting: MBAS24_0323_10071 8 m Mariage Profile Messages Calendar wy u Unit 7 - 75.00 pts Questioni - M Save Assignment Submitted 1 (Analyzing inventory reductions at Supervalu) In a narrative format, answer all question presented in the case, ATC 6-1. Mention some ways other than cost cutting that will improve company operations. Click here to edit four answer Chat INTL 0 9 :38 SAMSUNG INICATE ATC 6-1 Business Application Case Analyzing inventory reductions at Supervalu Real-world companies often reduce the complexity of their operations in an attempt to increase prof. its. In late 2014 and early 2015 McDonald's Corporation announced a series of restructuring efforts it planned to undertake to improve profitability. One of these was to reduce the number of items of fered for sale in its restaurants. In October 2014, General Motors announced plans to reduce the number of vehicle production platforms on which it builds cars from 26 to four by 2025. In 2010, Supervalu, Inc., one of the largest grocery store companies in the United States, announced it was planning to reduce the number of different items it carries in its inventory by as much as 25 percent. Supervalu is one of the largest grocery store companies in the United States. Most of the planned reduction in inventory items at Supervalu was going to be accomplished by reducing the number of different package sizes rather than by reducing entire product brands. The new approach was intended to allow the company to get better prices from its vendors and to put more emphasis on its own store brands. Helena quired Identify some costs savings these companies might realize by reducing the number of items they sell or use in production. Be as specific as possible, and use your imagination. Consider the additional information presented below, which is hypothetical. All dollar amounts are in thousands, unit amounts are not. Assume that Supervalu decides to eliminate one product line. Su gar-Bits, for one of its segments that currently produces three products. As a result, the following are expected to occur: (1) The number of units sold for the segment is expected to drop by only 40,000 because of the elimination of Sugar-Bits, since most customers are expected to purchase a Fiber-Treats or Carbo-Crunch product instead. The shift of sales from Sugar-Bits to Fiber-Treats and Carbo-Crunch is expected to be evenly split. In other words, the sales of Fiber-Treats and Carbo-Crunch will each increase by 100,000 units. (2) Rent is paid for the entire production facility, and the space used by Sugar-Bits cannot be sublet. (3) Utilities costs are expected to be reduced by $24,000. () All of the supervisors for Sugar-Bits were all terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch. (5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod- ucts. However, the company believes that as a result of eliminating Sugar-Bits it can dispose of equipment that has a remaining useful life of 5 years, and a projected salvage value of $20,000. Its current market value is $35,000.B 161 Facilit doulence will continue to be al l hann the lines haced on the num (3) Utilities costs are expected to be reduced by S24.000, (4) All of the supervisors for Sugar-Bits were all terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch. (5) The equipment being used to produce Sugar-Bits is also used to produce the other two prod ucts. However, the company believes that as a result of eliminating Sugar-Bits it can dispose of equipment that has a remaining useful life of 5 years, and a projected salvage value of $20,000. Its current market value is $35,000. R (6) Facility-level costs will continue to be allocated between the product lines based on the num, ber of units produced. Product-Line Earnings Statements (Dollar amounts are in thousands) Annual Costs of Operating Each Product Line Fiber Treats Carbo- Crunch Sugar- Bits Total 480,000 $480,000 1 480,000 $480,000 240,000 $240,000 1,200,000 $1,200,000 Sales In units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous 48,000 6,000 10,800 3,600 E 48,000 R6,000 9.600 2.400 26,400 2,400 4,800 2.400 122.400 14,400 25,200 8.400 Read Annual Costs of Operating Each Product Line Fiber- Treats Carbo- Crunch Sugar Bits Total 480,000 $480,000 480,000 $480,000 240,000 $240,000 1,200,000 $1,200,000 E 48.000 Sales in units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous Total unit-level costs 48,000 6,000 10,800 3,600 68,400 R6,000 9,600 2,400 66,000 26,400 2,400 4,800 2,400 36,000 122.400 14,400 25,200 8,400 170,400 4.800 3,600 1,200 9,600 1 48,000 Product-level costs: Supervisors' salaries Facility-level costs: Rent Utilities Depreciation on equipment Allocated companywide expenses Total facility-level costs Total product cost Profit on products 8 60,000 48,000 60,000 192,000 12,000 312,000 385,200 $ 94.800 192,000 2 12,000 7312,000 381,600 $ 98,400 24,000 30,000 96,000 6.000 156,000 193,200 $ 46,800 120,000 150,000 480,000 30.000 780,000 960.000 $ 240.000 Shipping and handling Miscellaneous Total unit-level costs 6,000 10,800 3,600 68,400 6,000 9,600 2,400 66,000 2.400 4,800 2,400 36,000 14.400 25.200 3,400 170.400 4,800 3,600 1,200 9,600 1 48,000 Product-level costs: Supervisors' salaries Facility-level costs: Rent Utilities Depreciation on equipment Allocated companywide expenses Total facility-level costs Total product cost Profit on products 48,000 60,000 192,000 12,000 312,000 385,200 $ 94,800 $ 60,000 192,000 2 12,000 312,000 381,600 $ 98,400 24,000 30,000 96,000 6,000 156,000 193,200 $ 46,800 120,000 150,000 480,000 30,000 780,000 960,000 $ 240,000 Prepare revised product-line earnings statements based on the elimination of Sugar-Bits. (Hint: It will be necessary to calculate some per-unit data to accomplish this.)