This paper circulates around the core theme of Determine whether Dawson Company should drop any game.Write a memo to the manager with your recommendation. together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Dawson Company manufactures three types
of computer games: Skyhawk, Seahawk, and
Sharks. It allocates overhead to the
games based on the number of direct labor hours worked on each product. The results of the most recent period follow:
|
|
Skyhawk
|
Seahawk
|
Sharks
|
|
Units produced and sold
|
9,000
|
8,000
|
7,000
|
|
Selling Price
|
$45.00
|
$30.00
|
$25.00
|
|
Less:
|
|
|
|
|
Direct materials per unit
|
5.50
|
4.25
|
3.00
|
|
Direct labor cost per unit
|
9.00
|
2.00
|
3.00
|
|
Manufacturing overhead per unit
|
27.00
|
6.00
|
9.00
|
|
Gross Margin
|
3.50
|
17.75
|
10.00
|
|
Less:
|
|
|
|
|
Selling cost per unit
|
2.25
|
1.50
|
1.25
|
|
Administration cost per unit
|
3.75
|
3.00
|
2.75
|
|
Net Income (loss) per unit
|
$(2.50)
|
$13.25
|
$6.00
|
The manager of Dawson Company is
concerned that the Skyhawk game seems to be a net loser and he is considering
whether to discontinue it. He has asked
you to analyze the situation and make a recommendation. Your analysis reveals that Dawson Company has
three levels of overhead – faculty sustaining, batch-related, and unit-related
– and that the appropriate overhead rates are $6.00 per square foot, $1,000 per
production run, and $4 per unit, respectively.
Resource usage during the past period follows. In addition, you discover that administrative
costs are fixed while selling costs are variable per unit.
|
|
Skyhawk
|
Seahawk
|
Sharks
|
|
Square feet occupied
|
10,000
|
12,500
|
15,000
|
|
Production runs
|
9
|
12
|
12
|
Required:
A. Determine whether Dawson
Company should drop any game.
B. Write a memo to the manager with your recommendation
