Hightech Company Recently Developed the Technology Necessary to Produce a Low-End

question 55

Essay

Hightech Company recently developed the technology necessary to produce a low-end, a medium-end, and high-end computer memory chip for heart monitoring healthcare equipment.Budgeted fixed costs for the manufacture of all three products total $4,250,000.The budgeted sales by product and in total for the coming year are as follows: Required:
1.Prepare a contribution income statement for the year based on actual sales data (but budgeted cost data, for both variable and fixed costs).
2.Compare the breakeven sales dollars for the year based on both budgeted and on actual sales, assuming that the sales mix remains constant in terms of sales dollars.(Round contribution margin ratios, in all calculations, to three decimal places.Round answer in dollars up, to the nearest whole number.)
3.The company president knows that total actual sales were $8,250,000 for the year, the same as budgeted.Because she had seen the budgeted income statement, she was expecting a nice profit from producing the memory chips.Explain to her what happened.

Evaluate the impact of overhead allocation on product pricing and profitability.

Differentiate between plantwide overhead rates and activity-based costing rates.

Analyze the distribution of resource consumption across activity cost pools using ABC data.

Understand the role of direct labor-hours in the calculation of plantwide overhead rates versus ABC system rates.

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Definitions:

Favorable Reaction

Refers to a positive or approving response to a situation, action, or information.

Spinach

A leafy green vegetable rich in vitamins and minerals, often used in salads and cooked dishes.

Altruism

The selfless concern for the well-being of others, often leading to actions that benefit others at a cost to oneself.

Prejudice

A preconceived judgement or opinion about someone or something that is not based on reason or actual experience, often manifesting as bias or discrimination.