Chapter 20 - homework questions template Solutions (1)

Sk8 Company produces skateboards and purchases 20,000 units of a wheel bearing each year at a cost of $1 per unit. Sk8 requires a 15% annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials handling, breakage, etc.) is $0.17 per unit per year. The relevant ordering cost per purchase order is $38.40. Q. Calculate Sk8’s EOQ for the wheel bearing.

Sk8 Company produces skateboards and purchases 20,000 units of a wheel bearing each year at a cost of $1 per unit. Sk8 requires a 15% annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials handling, breakage, etc.) is $0.17 per unit per year. The relevant ordering cost per purchase order is $38.40. Q. Assume that demand is uniform throughout the year and known with certainty so there is no need for safety stocks. The purchase-order lead time is half a month. Calculate Sk8’s reorder point for the wheel bearing.

15. ERD Company manufactures and sells two types of beach towels, standard and deluxe. ERD expects the following operating results next year for each type of towel: Standard Deluxe Sales P450,000 P50,000 Variable expenses (total) P360,000 P20,000 If ERD expects to incur P57,600 in fixed expenses next year, its break-even point must be:

A plastic manufacturing company that makes four major products seeks to expand its operationsin the coming year. At the beginning of the financial year, the company must decide on which offour new machines A, B, or C to purchase to be able to meet total annual demand. Each machineoperates 14 hours a day, 360 days a year. Machine A costs GH¢43,000, machine B costsGH¢37,500 and machine C costs GH¢75,000. The following product forecasts and processing times have been projected:                      Demand,                     units/year               Processing times per Unit (Minutes) Product                              Machine A         Machine B             Machine CPenholders        16,000             5                         3                         6Bowls                14,000             4                          3                         5Cups                   6,000             6                         5                         7Carrier Bags      24,000            3…

Required: If ERD expects to incur P57,600 in fixed expenses next year, its break-even point must be?

35. A large producer of household products purchases a glyceride used in one of its deodorant soaps from outside of the company. It uses the glyceride at a fairly steady rate of 40 pounds per month, and the company uses a 23 percent annual interest rate to compute holding costs. The chemical can be purchased from two suppliers, A and B. A offers the following all-units discount schedule: Order Size Price per Pound $1.30 0sQ< 500 500 < Q< 1,000 1,000 < Q 1.20 1.10 whereas B offers the following incremental discount schedule: $1.25 per pound for all orders less than or equal to 700 pounds, and $1.05 per pound for all incremental amounts over 700 pounds. Assume that the cost of order processing for each case is $150. Which supplier should be used?

Porter's Paints produces high-end industrial paint primer and sells the primer for $45 per gallon. The company's variable cost is $21.60 per gallon of primer. Annual fixed costs related to the primer are $197,145. Porter expects to sell 18,000 gallons of primer in 2021. What is 2021 expected profit? $618,345 $224,055 $421,200 $810,000

A plastic manufacturing company that makes four major products seeks to expand its operations in the coming year. At the beginning of the financial year, the company must decide on which of four new machines A, B, or C to purchase to be able to meet total annual demand. Each machine operates 14 hours a day, 360 days a year. Machine A costs GH¢43,000, machine B costs GH¢37,500 and machine C costs GH¢75,000. The following product forecasts and processing times have been projected:                      Demand,                     units/year               Processing times per Unit (Minutes) Product                              Machine A         Machine B             Machine CPenholders        16,000             5                         3                         6Bowls                14,000             4                          3                         5Cups                   6,000             6                         5                         7Carrier Bags      24,000            3…

16. Race Corporation manufactures batons. Race can manufacture 300,000 batons a year at a variable cost of $750,000 and a fixed cost of $450,000. Based on Race's predictions for next year, 240,000 batons will be sold at the regular price of $5.00 each. In addition, a special order was placed for 60,000 batons to be sold at a 40% discount off the regular price. Total fixed costs would be unaffected by this order. By what amount would the company's operating income be increased or decreased as a result of the special order? Select one: a. $180,000 increase. b. $60,000 decrease. c. $36,000 increase. d. $30,000 increase.

(D) Delta Company produces mobiles and purchases batteries at $30 per unit. The management proposes producing the batteries instead of purchasing them. The annual quantity of batteries is 50,000 units. The costs of producing the batteries are: $20 variable cost per unit, The company will pay an annual rent of $250,000 to rent a new machine to produce the batteries. The general (old) fixed cost for the company is $500,000. Do you advise the company to produce the batteries or to purchase it? Justify? (E) Nile Co. can produce 2 products, � & B; the following data is estimated to help in preparing the production plan for the coming period to maximize the profit: \table[[,A,B],[Price,$30,$50

ACME Company purchases for resale 1,000 widgets for $64 each. At year- end, the replacement cost is $63 per widget, the estimated selling price is $68 per widget, the disposal cost is $7 per widget, and the estimated markup is $10 per widget.[General Account] If ACME uses LCM costing by item, at what amount will the widgets be reported on the balance sheet? a. $63,000 b. $51,000 c. $64,000 d. $62,500 e. $61,000

Sheffield Corp. sells indoor high-resolution security cameras with a unit selling price of $80, a unit contribution margin of $64, and a contribution margin ratio of 80%. The company projects total fixed costs for the next year to be $3336000. How many units must the company sell to break-even? O 41700 O 4170 O 64000 O 52125

1. Party Co. produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts are: Variable manufacturing cost, P12.00; fixed manufacturing cost, P9.00. The part can be purchased from an outside supplier at P20.00. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. What would be the annual impact on the company’s net operating income as a result of buying the part from the outside supplier? 2.Division A produces a part that it sells to outside customers. Data concerning this part follows: Selling price to outside customers, P60; Variable cost per unit, P40; Total fixed costs, P100,000; Capacity in units, 20,000 units. Division B of the same company purchases 5,000 units of similar part from an outside supplier at a price of P58 per unit. If Division B wants to purchase 5,000 units from Division A instead, and Division A has no idle capacity, what should be the…

A machine manufacturer sells each machine for $7,300. The fixed costs are $279,550 per annum, variable costs are $1,500 per machine, and the production capacity is 58 machines in a year. What is break-even as a percent of capacity per annum?

A manufacturer of ovens sells them for $1,370.00 each. The variable costs are $1,020.00 per unit. The manufacturer's factory has annual fixed costs of $2,460,000.00. Given the expected sales volume of 3,700 units for this year, what will be this year's net income?   Round to two decimal places