Playtime Electronics Produces Two Kinds of Electronic Toys,Wizards and Gizmos

question 127

Essay

Playtime Electronics produces two kinds of electronic toys,Wizards and Gizmos.During the current period,8,000 Wizards and 16,000 Gizmos were produced and sold,generating revenues of $500,000 and $2,000,000,respectively.Unit production costs for the two toys are $50 for Wizards and $70 for Gizmos.In calculating the cost of goods sold,Playtime uses activity-based costing to allocate its overhead costs.However,upstream costs of $240,000 are allocated equally to the two products.
Required:
1)Compute the total net profit for each product and for the firm as a whole.
2)Would you advise eliminating either toy? Why or why not?

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Definitions:

Somatic Symptom Disorder

A psychological disorder involving persistent and significant focus on physical symptoms, such as pain, that cause major distress or problems in functioning.

Physical Symptoms

Observable or felt signs of illness or injury, potentially involving any part of the body.

Psychogenic Disorders

Mental health conditions that are believed to arise from psychological or emotional rather than physical causes.

Biological Causes

The factors related to the physical or biochemical processes in the body that can lead to various conditions or diseases.