ACT 5140 chpt 21 hw
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ACT 5140 chpt 21 hw
Brief Exercise 21.4 (Static) Outsourcing a Product (LO21-2, LO21-4, LO21-5)
~ outsourcing cost =$40 per; current cost = $32 per; potential additional income = $9600/year
~@64 installations, outsourcing cost-> (40-32)*64 = $512/month or $6144 a year
I think
Correct answer
Exercise 21.1 (Static) Accounting Terminology (LO21-1, LO21-2, LO21-3, LO21-4, LO21-
5)
Exercise 21.4 (Static) Scarce Resources (LO21-1, LO21-2, LO21-3, LO21-4)
Combination of products shall be:
Denim = 6,000 bolts
Chenille = 240 bolts
Gauze = 1,200 bolts
Explanation:
As provided the machine hours are limited thus, the constraint is machine hours.
Accordingly contribution per machine hour shall be computed.
Denim has contribution of $14 for each 0.5 machine hour, thus, contribution per hour =
Chenille has contribution of $22 per machine hour
Gauze has contribution of $9 per 0.3 hours, thus contribution per machine hour =
= $30
According to contribution per hour, ranking of products shall be
Gauze I
Denim II
Chenille III
Therefore, bolts of gauze to be produced = 1,200 that is maximum
Hours required = 1,200
0.3 = 360
Hours remaining = 3,600 - 360 = 3,240
Bolts of Denim to be produced = 6,000 that is maximum
Hours required = 6,000
0.5 = 3,000
Hours remaining = 3,240 - 3,000 = 240
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Bolts of Chenille that can be produced =
= 240 bolts
Total contribution in this case
= (1,200
$9) + (6,000
$14) + (240
$22)
= ($10,800 + $84,000 + $5,280)
= $100,080
Exercise 21.6 (Static) Incremental Analysis: Make or Buy Decision (LO21-1, LO21-2, LO21-3, LO21-4)
a) The
incremental analysis
for variable overhead is nil, for fixed overhead is 0, purchase
price is $90,000 and for total cost $15000. b) No, the company should continue manufacturing not buying.
a) To determine whether Swank Company should buy the part or continue to manufacture it, we need to compare the total cost of manufacturing with the total cost of buying the part from an outside
supplier
.
Let's complete the comparative schedule using the information:
Make the Part Buy the Part Incremental Analysis
Variable Overhead
$75,000 - -
Fixed
Overhead $60,000 $60,000 0
Purchase Price of part $6 per unit $90,000 ($90,000)
Total cost to acquire part $135,000 $150,000 ($15,000)
In the comparative schedule, we have filled in the costs for the manufacturing option (Make the Part) and the buying option (Buy the Part). Now, we can calculate the incremental analysis by subtracting the costs of the buying option from the costs of the manufacturing option.
Incremental Analysis = Total cost to acquire part (Make the Part) - Total cost to acquire part (Buy the Part)
Incremental Analysis = $135,000 - $150,000
Incremental Analysis = -$15,000
The incremental analysis represents the difference in costs between the two options. In this case, the negative value indicates that it would be $15,000 cheaper to continue manufacturing the part rather than buying it from the outside supplier.
b) Therefore, based on the incremental analysis, Swank Company should continue to manufacture the part rather than buying it.
Learn more about
fixed cost
here:
brainly.com/question/30764172
#SPJ11
Complete question is:
"The cost to Swank Company of manufacturing 15,000 units of a particular part is $135,000, of which $60,000 is fixed and $75,000 is variable. The company can buy the part from an outside supplier for $6 per unit. Fixed costs will remain the same regardless of Swank’s
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decision. Should the company buy the part or continue to manufacture it? Prepare a comparative schedule in the format illustrated in Exhibit 21–6 .
Exhibit 21-6
Make the Part Buy the Part Incremental Analysis
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000 $ 8,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500 12,500
Variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 $ 1,000 9,000
Fixed overhead . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 29,500 27,000 2,500
Purchase price of part, $5 per unit . . . .. . . . . . . . . . ______ 50,000 (50,000 )
Total cost to acquire part . . . . . . . . . . . . . . . . . . . . . $60,000 $78,000 $ (18,000)
Here is a start to the answer, but I am unsure because there is no reference to a decrease in variable costs.
beginning to answer:
Make the Buy the Incremental
part part Analysis
Variable Overhead $75,000
Fixed Overhead 60,000 60,000
Purchase Price of part, $6 per unit 9,000 (9,000)
Total cost to acquire part $135,000"
(from https://brainly.com/question/33043922
) gives an ok explanation Exercise 21.7 (Static) Make or Buy Decision (LO21-1, LO21-2, LO21-3, LO21-4)
To determine whether Bacrometer should continue producing the fans or accept the bid from the other manufacturer, we need to analyze the costs associated with each option.
1.
Cost of Producing Fans In-House:
o
Variable cost per unit = $9
o
Monthly production = 5,000 units
o
Total variable cost per month = 5,000 units x $9/unit = $45,000
2.
Cost of Purchasing Fans from Another Manufacturer:
o
Cost per unit = $10
o
Monthly requirement = 5,000 units
o
Total cost per month = 5,000 units x $10/unit = $50,000
3.
Opportunity Cost of Renting Out Production Line:
o
Rental income = $7,500 per month
Analysis:
If Bacrometer continues to produce the fans in-house, the total monthly cost is $45,000.
If Bacrometer accepts the bid and rents out the production line, the total monthly cost would be $50,000 for buying the fans, but they would gain $7,500 from renting out the production line. Thus, the net cost would be $50,000 - $7,500 = $42,500.
Conclusion:
Bacrometer would save money by accepting the bid to buy the fans for $10 each and renting out their production line. The savings would be $45,000 (cost of producing in-
house) - $42,500 (net cost after renting out the line) = $2,500 per month. Therefore, it would be financially beneficial for Bacrometer to accept the bid and rent out the production line.
Incremental cost to make = 45000
Incremental cost to make = 42500 (explanation in analysis)
Exercise 21.8 (Static) Sunk Costs: Scrap or Rework Decision (LO21-1, LO21-2, LO21-3, LO21-4)
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The
net proceeds from selling
the reworked units is $66,000 and the scrap value of the units is $60,000.
Explanation:
To prepare a
schedule
showing the
effect
of selling the defective units as scrap or
rework
, we need to compare the
net proceeds
from selling the reworked units and the
scrap value
of the units.
Scrap Value:
The scrap value of the units can be calculated by multiplying the number of defective units (12,000) by the scrap price per unit ($5). This gives us a total scrap value of $60,000.
Net Proceeds from Reworked Units:
To calculate the net proceeds from selling the reworked units, we need to subtract the cost of reworking the units ($30,000) from the total revenue generated by selling the reworked units. The revenue can be calculated by multiplying the number of reworked units (12,000) by the selling price per unit ($8). This gives us a total revenue of $96,000. Subtracting the reworking cost, we get a net proceeds of $66,000.
Therefore, the net proceeds from selling the reworked units is $66,000 and the scrap value of the units is $60,000.
Exercise 21.9 (Static) Scarce Resources (LO21-1, LO21-2, LO21-3, LO21-4)
Solving for my problem
Exercise 21.10 (Static) Joint Products (LO21-1, LO21-2, LO21-3, LO21-4)
This is the answer since we’re comparing the price each can be sold for vs the profit if you split off. Both split off profits are lower than what you could sell. a) Profit beyond split off:
Amoxiphore = 4,200 - 1,600 = 2,600
Benidrate = 6,000 - 3,700 = 2,300
[Take note that 4,000 is not considered since it is sunk costs, which is irrelevant to the decision
making. It is incurred whether the company process further or not.]
**Amoxiphore is more profitable because it has a higher incremental profit than Benidrate.
b) Some nonfinancial issues to consider are the quality of the medicines and production capacity of the company.
Exercise 21.13 (Static) Evaluating a Special Order (LO21-1, LO21-2, LO21-3)
~ professor’s spreadsheet
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Problem 21.3A (Static) Make or Buy Decision (LO21-1, LO21-2, LO21-3, LO21-4)
~ professor’s spreadsheet has detailed explanation
Problem 21.6A (Static) Sell or Rebuild Decision (LO21-1, LO21-2, LO21-3, LO21-4, LO21-
5)
~ professor’s spreadsheet has detailed explanation
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