Assume the role of the controller of Quinn Machine Tools, Inc. Explain to Joel why he is wrong.
Consider the following cost and production information for Quinn Machine Tools, Inc.

Quinn Machine Tools, Inc. uses the throughput costing method.
Required
(a) Compute the throughput contribution margin, operating income, and ending inventory for Quinn Machine Tools, Inc.
(b) Assume that sales of part D-1251 increases by 15 units during the given period (production remains constant). Re-compute the above figures.
(c) Joel Shukla, the production manager of Quinn Machine Tools, argues with the controller that computing costs for each different part is a waste of time. He asks: "Costs per unit of the different parts are average costs after all. How is that an improvement over using overall average cost?"

Question

Assume the role of the controller of Quinn Machine Tools, Inc. Explain to Joel why he is wrong.
  Consider the following cost and production information for Quinn Machine Tools, Inc.
 
Quinn Machine Tools, Inc. uses the throughput costing method.
Required
(a) Compute the throughput contribution margin, operating income, and ending inventory for Quinn Machine Tools, Inc.
(b) Assume that sales of part D-1251 increases by 15 units during the given period (production remains constant). Re-compute the above figures.
(c) Joel Shukla, the production manager of Quinn Machine Tools, argues with the controller that computing costs for each different part is a waste of time. He asks: "Costs per unit of the different parts are average costs after all. How is that an improvement over using overall average cost?"

Quizplus · Accepted Answer

The Answer of Assume the role of the controller of Quinn Machine Tools, Inc. Explain to Joel why he is wrong.
  Consider the following cost and production information for Quinn Machine Tools, Inc.
 
Quinn Machine Tools, Inc. uses the throughput costing method.
Required
(a) Compute the throughput contribution margin, operating income, and ending inventory for Quinn Machine Tools, Inc.
(b) Assume that sales of part D-1251 increases by 15 units during the given period (production remains constant). Re-compute the above figures.
(c) Joel Shukla, the production manager of Quinn Machine Tools, argues with the controller that computing costs for each different part is a waste of time. He asks: "Costs per unit of the different parts are average costs after all. How is that an improvement over using overall average cost?"

Assume the Role of the Controller of Quinn Machine Tools