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1. How much of the fixed costs were allocated
between the Standard and Deluxe Boxes based on the Lumpsum Analysis Method? Is the
CEO correct that the Deluxe Box is not contributing much to the company’s
operating profit? Please elaborate on your answer and include evidence from Tab
1 of the Excel workbook.
2. The intern suggested splitting the costs
based on sales volumes, as you have done in the calculations performed in Tab 2.
Explain the impact of the calculation performed in Tab 2. In your discussions, please
explain why the answer has changed from the calculations you performed in Tab 1.
It also indicates the benefit of accurate costing when trying to improve operating
profit margins.
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