Answered: A factory produces ball bearings for…

A factory produces ball bearings for the industry. It makes 10,000, all the same type. Materials cost $5,000 Labor $30,000 Power $10,000 per year Unit cost is $

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter13: The Balanced Scorecard: Strategic-based Control

Section: Chapter Questions

Problem 8E: Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its...

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Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit. Materials $ 36.00 Labor 14.00 Variable overhead 4.00 Fixed overhead ($1,800,000 per year; 100,000 units per year) 18.00 Total $ 72.00 Simpson Company has approached Andreasen with an offer to buy 7,500 thermostats at a price of $60 each. The regular price is $100. Andreasen has the capacity to produce the 7,500 additional units without affecting its current production of 100,000 units. Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2 per unit material cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one-time rental of packaging equipment for $20,000. Required: a. Prepare a schedule to show the impact of filling the Simpson order on Andreasen’s profits for the year. b. Do you agree with the…
Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit. Materials $ 36.00 Labor 14.00 Variable overhead 4.00 Fixed overhead ($1,926,000 per year; 107,000 units per year) 18.00 Total $ 72.00 Simpson Company has approached Andreasen with an offer to buy 9,100 thermostats at a price of $60 each. The regular price is $100. Andreasen has the capacity to produce the 9,100 additional units without affecting its current production of 107,000 units. Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2.00 per unit material cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one-time rental of packaging equipment for $34,000. Required: a. Prepare a schedule to show the impact of filling the Simpson order on Andreasen's profits for the year. b. Do you agree with the decision to accept the special order? c.…
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Your Company has the capacity to produce 80,000 units. It produces and sells 70,000 units of a product each year. At this level of activity, Clark Company incurs the following unit costs:Direct materials $18Direct labor 25Variable overhead 9Fixed overhead 10Variable S&A 7Fixed S&A 12A special order for 9,000 units under consideration would require the one-time rental of a special machine. The rental is for $36,000. If the order is accepted, $5 of the variable S&A can be avoided. What is the least amount the company can charge per unit in this special pricing decision? (Think breakeven.) a) $61 b) $56 c) $58 d) $59 e) $57
Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit. Materials Labor Variable overhead Fixed overhead ($1,980,000 per year; 110,000 units per year) Total $36.00 14.00 4.00 18.00 $72.00 Simpson Company has approached Andreasen with an offer to buy 9,400 thermostats at a price of $60 each. The regular price is $100. Andreasen has the capacity to produce the 9,400 additional units without affecting its current production of 110,000 units. Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2.00 per unit material cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one- time rental of packaging equipment for $34,600. Required: a. Prepare a schedule to show the impact of filling the Simpson order on Andreasen's profits for the year. b. Do you agree with the decision to accept the special order? c.…
The Rodgers Company makes 27,000 units of a certain component each year for use in one of its products. The cost per unit for the component at this level of activity is as follows: Direct materials. $4.20 Direct labor. $12.00 $5.80 Variable manufacturing overhead. Fixed manufacturing overhead $6.50 ****** Rodgers has received an offer from an outside supplier who is willing to provide 27,000 units of this component each year at a price of $25 per component. Assume that direct labor is a variable cost. None of the fixed manufacturing overhead would be avoidable if this component were purchased from the outside supplier. Assume that there is no other use for the capacity now being used to produce the component and the total fixed manufacturing overhead of the company would be unaffected by this decision. If Rodgers Company purchases the components rather than making them internally, what would be the impact on the company's annual net operating income? Select one: a. $94,500 increase b.…
Specter Company makes 20,000 units per year of a part it uses in the products it manufactures.The unit product cost of this part is computed as follows:Direct materials $25.10Direct labour 18.20Variable manufacturing overhead 2.40Fixed manufacturing overhead 13.40Unit product cost $56.70An outside supplier has offered to sell the company all these parts it needs for $56.00 a unit. Ifthe company accepts this offer, the facilities now being used to make the part could be used tomake more units of a product that is in high demand. The additional contribution margin on thisother product would be $50,000 per year.If the part were purchased from the outside supplier, all the direct labour cost of the part wouldbe avoided. However, $5.10 of the fixed manufacturing overhead cost being applied to the partwould continue even if the part were purchased from the outside supplier. This fixedmanufacturing overhead cost would be applied to the company's remaining products.Required:Part a:Calculate…
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5. Hernandez, Inc. manufactures three models of picture frames for a total of 8,000 frames per year. The unit cost to produce a metal frame follows: Direct materials Direct labor Variable overhead Fixed overhead (based on 8,000 units) (70% unavoidable) $ 6 8 2 5 Total $21 A local company has offered to supply Hernandez the 8,000 metal frames it needs for $18 each. (a) Prepare an analysis for this make or buy decision. babs mont 9269onlw areas bex rito8 (0 2200 orata baxit to tinu eq 22 b200 sideh as al netto lege (b) What should Hernandez do? Explain. ( * 0002) A 000.00 заколол 000 £29 c) If Hernandez buys the product from an outside supplier, it can generate an income of $20,000 from the released productive capacity used to make the product. How does this financially affect your analysis from a? 000,00-0000! (600,0PJ 0000200 $100,001 000.01
Econ Company produces widgets. Each widget sells for $120, and the company sells approximately 50,000 widgets each year. Unit cost data for the year follows: Direct Material, $38 Direct Labor, $20 Other Cost: Variable Fixed Manufacturing $12 $8 Distribution 8 6 a. $70 b. $45 c. $75 d. $89
A thermoplastic film manufacturer is trying to decide between 8 types of thermoforming molding processes to be added to its molding operation. The estimated costs and revenues are shown below. Compare them on the basis of the IRR method and determine which process should be selected if the company's MARR is 7% per year. B C D E F G Initial Costs $13,000 $12,00o $11,000 $12,500 $16,000 $26,000 $19,500 Annual expenses $6,550 $9,125 $7,000 $8,000 $7,000 $11,000 $12,000 $13,000 Annual revenue $9,000 $10,000 $9,500 $13,500 $16,000 $16,200 Lifetime(years) 9. 9 9. 9. IRR 11.54% 6.88% 9.17% 11.81% 5.24% 4.86% 6.48% Perform an IRR-incremental analysis to find the best alternative.