E7.6 (LO 3), E Jobs, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and gasleaks and then transmit this information to a smartphone. The cost structure to manufacture 20,000 Tri-Robos is as follows.Cost$1,000,000800,000120,000600,000$2,520,000Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,300,000.Instructionsa. Using incremental analysis, determine whether Jobs should accept this offer under each of the following independent assumptions.1. Assume that $405,000 of the fixed overhead cost can be avoided.2. Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Jobs can use thereleased productive resources to generate additional income of $375,000.b. Describe the qualitative factors that might affect the decision to purchase the robots from an outside supplier.Direct materials ($50 per robot)Direct labor ($40 per robot)Variable overhead ($6 per robot)Allocated fixed overhead ($30 per robot)TotalPrenare incremental analysis for make-or-buu decision

Depending on a cost-benefit analysis, a make or buy decision is made on whether to produce a good or…

Answered: E7.6 (LO 3), E Jobs, Inc. has recently…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Oahu Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 5,100 units at $276 per unit. The equipment has a cost of $521,700, residual value of $39,300, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Line Item Description Amount Cost per unit: Direct labor $47.00 Direct materials 182.00 Factory overhead (including depreciation) 31.60 Total cost per unit $260.60 Determine the average rate of return on the equipment. If required, round to the nearest whole percent.
Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $2.70 per unit. Enough capacity exists in the company's plant to produce 30,400 units of the toy each month. Variable expenses to manufacture and sell one unit would be $1.72, and fixed expenses associated with the toy would total $44,188 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,400 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,209 per month. Variable expenses in the rented facility would total $1.89 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. What is the monthly break-even point for the new toy in unit sales and dollar sales. 2. How many units must be sold each month to attain a target profit…
Jupiter Game Company manufactures pocket electronic games. Last year Jupiter sold 25,000 games at $25 each. Total costs amounted to $525,000, of which $150,000 were considered fixed costs. In an attempt to improve its product, the company is considering replacing a component part that has a cost of $2.50 with a new and better part costing $4.50 per unit in the coming year. A new machine also would be needed to increase plant capacity. The machine would cost $18,000 with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. (Ignore income taxes). 1) If the firm holds the sales price constant and makes the suggested changes, how many units of product will the company have to sell to make the same net income as last year?
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
Waterways has discovered that a small fitting it now manufactures at a unit cost of $1.00 could be bought elsewhere for $0.81 per unit. Waterways has unit fixed manufacturing costs of $0.20 that cannot be eliminated by buying this unit. Waterways needs 465,000 of these units each year.If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.33. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,344, and the unit cost of producing the units would be $9.40. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should (make or buy?) the fitting. Incremental cost / (savings) will be
pleasehelp32 Fone Zone Corporation manufactures telephones. Recently, the company produced a batch of 640 defective telephones at a cost of $9,400. Fone Zone can sell these telephones as scrap for $10 each. It can also rework the entire batch at a cost of $6,900, after which the telephones could be sold for $21 per unit. If Fone Zone reworks the defective telephones, by how much will its operating income change? Multiple Choice Increase by $7,040 Increase by $6,540 Decrease by $2,860 Decrease by $6,540
P22-38 (similar to) Bobwhite Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing machines that will allow for the laundry's status to be checked via smartphone. Bobwhite estimates the cost of the new equipment at $191,000. The equipment has a useful life of 9 years. Bobwhite expects cash fixed costs of $76,000 per year to operate the new machines, as well as cash variable costs in the amount of 5% of revenues. Bobwhite evaluates investments using a cost of capital of 10%. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate the payba (Round your answer to two decimal p The payback period in years, for the 1. Requirements Calculate the payback period and the discounted payback period for this investment, assuming Bobwhite expects to generate $150,000 in incremental…
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $240,352. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,600 2 400,200 3 410,000 4 425,200 5 432,400 6 435,500 7 436,300 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $380,500. This new equipment would require maintenance costs of $94,900 at the end of the fifth year. The cost of capital is 9%. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign…
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Gonzalez Corporation manufactures a children's bicycle, model CT8. Gonzalez currently manufactures the bicycle frame. During 2023, Gonzalez made 30,000 frames at a total cost of $750,000. Ryan Corporation has offered to supply as many frames as Gonzalez wants at a cost of $23.50 per frame. Gonzalez anticipates needing 33,000 frames each year for the next few years. Required Requirement 1. (a) What is the average cost of manufacturing a bicycle frame in 2023? How does it compare to Ryan's offer? The average cost of $ per frame is than Ryan's offer. (b) Can Gonzalez use the answer in requirement 1a to determine the cost of manufacturing 33,000 bicycle frames? Explain. Gonzalez take the average manufacturing cost in 2023 to determine the total cost of manufacturing 33,000 bicycle frames. The reason is that Requirement 2. Gonzalez's cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the bicycle frame as the…
Crane Company manufactures dog food for distribution in Washington, Oregon, and California. A dog food distributor from Florida has approached Crane and offered to purchase 264000 pounds of dog food for $1.40 per pound. Crane can produce 2048000 pounds of dog food per year, and its results for last year are as follows: Sales (1844000 at $1.65) Variable costs Contribution margin Fixed costs Operating income $3042600 O $1392800 O $1336400 O $2084400 O $1270400 1106400 1936200 814000 $1122200 If Crane accepts the offer, it will only be able to sell 1784000 pounds of dog food at the regular price due to its capacity constraints. What will Crane's total operating income be next year if it accepts the offer?

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