322_practise final

docx

School

Simon Fraser University *

*We aren’t endorsed by this school

Course

322

Subject

Economics

Date

Jan 9, 2024

Type

docx

Pages

Uploaded by Malinena

Formula Sheet Gross Margin = Revenue – COGS Reorder point = Lead time × Average daily or weekly usage OEE = Availability × Performance × Quality Price variance = AQ (AP – SP) Quantity variance = SP (AQ – SQ) 1

Question 1 Part A Medical Lab Supplies distributes medical supplies and equipment throughout North America. Selected information related to a quick-developing X-ray film carried by the company is given below: Management is trying to determine the proper safety stock to carry on this inventory item and to determine the proper reorder point. Economic order quantity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400 units Maximum weekly usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 units Lead time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 weeks Average weekly usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 units Required: a) Assume that no safety stock is to be carried. What is the reorder point? (2 Marks) b) Assume that a full safety stock is to be carried. What is the size of the safety stock in units? What is the reorder point? (5 Marks) 2

Part B Amazon operates a customer call center in Vancouver, which it employs 2 work shifts of 30 employees each. The call center operates 7 days per week. Each work shift lasts 8 hours, and each employee gets paid breaks totaling 1 hour. Breaks are staggered so that the call center is available to customers for the full 8 hours per shift. During a recent week, the first shift had actual operating time of 1,200 hours. Calling records showed that the actual time to complete a call averaged 5.3 minutes, but the expected time per call was 4.5 minutes. During this week, the first shift completed 11,000 calls, of which 1,100 were repeat calls from customers whose problems were not resolved during the first call. Repeat calls are counted as defective calls. Required: Compute the first shift’s overall equipment effectiveness. 3

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Question 2 Slyman Manufacturing Inc. has developed the following standards for one of its products. The materials are not substitutable. Material 1 5 yards $6/yard $30 Material 2 6 pieces $5/piece $30 Direct labor 3 hours $24/hour $72 Total variable cost per unit $132 4

The records for March showed the following actual results: Purchased 10,000 yards for $58,000 Used 9,500 yards Purchased 15,000 pieces for $78,750 Used 12,100 pieces Direct labor Units produced Material 1 Material 2 5,900 hours for $147,500 2,000 units Required: a) Calculate the material purchase price variance for material 1. (2 Marks) b) Calculate the material quantity variance for material 1. (2 Marks) c) Calculate the material purchase price variance for material 2. (2 Marks) d) Calculate the material quantity variance for material 2. (2 Marks) e) Calculate the labor rate variance. (2 Marks) f) Calculate the labor efficiency variance. (2 Marks) g) For each question above, indicate whether the variance is favorable or unfavorable. (3 Marks) 5 a. 58000-10000*6 = -2000 F b. 6*(9500-5*2000) = -3000 F c. 78750-5*15000 = 3750 U d. 5*(12100-6*2000) = 500 U e. 147500-24*5900 = 5900 U f. 24*(5900-3*2000) = -2400 F

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Questions 3 The Holt Manufacturing Company has the following information available regarding its September operations: Units Costs Beginning Inventory 0 Units Started during the period 10,000 Goods transferred out 8,500 Ending Inventory 1,000 Costs during the period Materials $30,000 Conversion $69,350 8

Holt adds all materials at the beginning of the process and estimates that ending inventory is 70% complete. The company uses the weighted-average method . Spoiled units are inspected out at the end of the process. Required: a) Compute the equivalent units for material costs and conversion costs. b) Compute the cost of goods transferred to finished goods. Specifically, calculate the total costs, material costs and conversion costs. c) Compute the cost of ending inventory. Specifically, calculate the total costs, material costs and conversion costs. (3 Marks) d) Compute the cost of spoilage assuming that all spoilage cost is considered to be undesirable and is written off in the accounting period incurred. (3 Marks) e) Record the journal entries for the finished goods and the spoiled goods. (6 Marks) (Please round your answers to 2 decimals) 9 a.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Question 4 Doggie Lover (DL) is considering opening a pet supply store near a new housing development. The decision horizon is 3 years, and the opportunity rate is 8%. The company currently has 1,000 square metres of unused space near the housing development, which it controls under a lease with 3 more years at $30 per square meter per year. The company has prepaid the total lease payments already. To open the pet supply store, DL needs to rent an additional 1,000 square metres for 3 years at $40 per square meter per year. The furniture and equipment needed to open the store will be purchased for $240,000 and will have $0 salvage value after 3 years. The company adopts the straight-line depreciation method. DL analysts estimates that the gross margin rate would be as high as 45%, and the sales, general, and administrative (SG&A) costs (cash) would be around $20,000 per year. The tax rate will keep 40% for the following 3 years. Currently, the market size is $500,000. DL analysts expect it to increase at an annual rate of 20% for the following 3 years. DL expects to capture 50% of the total neighborhood market unless PetSmart also opens a new location in the area. In that case, DL expects to gain only 30% of the market. DL analysts believe there is a 40% chance that PetSmart will enter the market. The impacts of the competitive entry could be felt as soon as year 2. Required : (Round your calculations to 2 decimals) a) Calculate the expected NPV of making the investment now without the competitor. (7 Marks) b) Calculate the expected NPV of making the investment now with the competitor. (7 Marks) c) Calculate the expected NPV of not making the investment now. (1 Mark) d) Based on your calculation, will you suggest DL management to open a pet supply store or not? Why or why not? (2 Marks) e) Instead of making the investment now, DL can defer the investment one year and wait to see whether PetSmart would enter into the market or not. DL analysts provides the following information to the management: Calculate the value of the option to wait. (3 Marks) 11

12 b.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

13 c. no investment d. e.

Question 5 Lilian Inc. has two divisions: the Liquid Division that manufactures chocolate and sells the liquid both internally and externally (at the price of $6 per gallon); and the Bar Division that manufactures candy bars. The Bar Division currently purchases liquid chocolate from the Liquid Division for $6 a gallon. They recently received a bid from the Sly Company to provide liquid chocolate at a price of $4.50 a gallon. The Liquid Division does not want to meet the price, saying it will cost them money because their costs are $5 per gallon. To Bar Division To outside customers Total Sales (gallon) 30,000 30,000 60,000 Variable cost of goods sold $75,000 $75,000 $150,000 Allocated fixed costs (Remain unchanged) $20,000 $20,000 $40,000 Allocated corporate costs (Remain unchanged) $55,000 $55,000 $110,000 Total costs $150,000 $150,000 $300,000 Required : a) What is the Liquid Division Income: 1) Currently (4 Marks) 2) If it accepts the $4.50 price (4 Marks) 3) If it does not accept the $4.50 price (4 Marks) b) What other issues need to be considered. Mention at least 3 issues/factor. (3 Marks) 14

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

MAT 240 Module 5-3 Assignment .docx

Final Exam - Practice Questions - AK.pdf

Assignment 1 - Soha Rizvi 1009091153.pdf

Assignment 1 - Soha Rizvi 1009091153-2.pdf

ProblemSet_PerfectCompetition_Solutions.pdf

ECON 304 HW 2.docx

ProblemSet_Production2_Solutions.pdf

SU_ECO2071_W2P_Lewis_A..docx

Recommended textbooks for you

Managerial Economics: Applications, Strategies an...

Economics

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:Cengage Learning

Microeconomic Theory

Economics

ISBN:9781337517942

Author:NICHOLSON

Publisher:Cengage

Managerial Economics: A Problem Solving Approach

Economics

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Cengage Learning

Economics Today and Tomorrow, Student Edition

Economics

ISBN:9780078747663

Author:McGraw-Hill

Publisher:Glencoe/McGraw-Hill School Pub Co

Micro Economics For Today

Economics

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Cengage,

EBK HEALTH ECONOMICS AND POLICY

Economics

ISBN:9781337668279

Author:Henderson

Publisher:YUZU

SEE MORE TEXTBOOKS

Recommended textbooks for you

Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Microeconomic Theory
Economics
ISBN:9781337517942
Author:NICHOLSON
Publisher:Cengage
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Micro Economics For Today
Economics
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Cengage,
EBK HEALTH ECONOMICS AND POLICY
Economics
ISBN:9781337668279
Author:Henderson
Publisher:YUZU