Answer the following short problems:1. Wergas, Inc. has determined the following for a given year:Economic order quantityTotal cost to place purchase orders for the yearCost to place one purchase orderCost to carry one unit for 1 yearWhat is Wergas' estimated annual usage in units?5,000 unitsP 10,000P 50P42. Alilio Company is planning to build a new plant in Batangas City. The plant is expectedto provide additional sales as follows:First YearSecond YearThird YearP 2.0 millionP2.5 millionP 3.0 million (maximum capacity)The financial manager of Alilio estimates that for every peso of sales, P0.25 must beinvested in current as sets. If all discounts are taken and bills are paid on time, accountspayable average P 0.04 per peso of sales. Other current liabilities, such as wages payable,typically average P0.05 per peso of sales.Required:a. Estimate the working capital investments required for the new plant in the l",2nd & 3rd year of operations.b.How do these requirements affect the associated cash flows and the viabilityof the project!3. Ariola Corporation spends Php 220,000 per annum on its collection department. Thecompany has Php 12M in credit sales. Its average collection period is 2.5 months, and thepercentage of bad debts loss is 4%. The company believes that if it were to double itscollection personnel, it could bring down the average collection period to 2 months andbad debt losses to 3%. The added cost is Php 130,000, bringing total expenditures to Php400,000 annuallyIs the increased effort worthwhile if the opportuning cost of funds is 20%? If tr is 10%?

Economic order quantity is the ordering quantity which gives minimum cost of ordering. This is…

Answer the following short problems: 1. Wergas, Inc. has determined the following for a given year: Economic order quantity Total cost to place purchase orders for the year Cost to place one purchase order Cost to carry one unit for 1 year What is Wergas estimated annual usage in units? 5,000 units P 10,000 P 50 P4

Answer the following short problems: 1. Wergas, Inc. has determined the following for a given year: Economic order quantity Total cost to place purchase orders for the year Cost to place one purchase order Cost to carry one unit for 1 year What is Wergas estimated annual usage in units? 5,000 units P 10,000 P 50 P4

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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Answer the following short problems: Wergas, Inc. has determined the following for a given year: Economic order quantity 5,000 units Total cost to place purchase orders for the year P 10,000 Cost to place one purchase order P 50 Cost to carry one unit for 1 year P 4 What is Wergas’ estimated annual usage in units? Alilio Company is planning to build a new plant in Batangas City. The plant is expected to provide additional sales as follows: First Year P 2.0 million Second Year P 2.5 million Third Year P 3.0 million (maximum capacity) The financial manager of Alilio estimates that for every peso of sales, P0.25 must be invested in current assets. If all discounts are taken and bills are paid on time, accounts payable average P 0.04 per peso of sales. Other current liabilities, such as wages payable, typically average P0.05 per peso of sales. Required: Estimate the working capital investments required for the new plant in the 1st, 2nd& 3rd year of operations. How…
solve i, ii and iii please. Suppose the demand of a product produced by a production firm is 8000 per year (1 year = 312 days) and it occurs at a constant rate. The production rate of the product per year is 10000. The set up cost of setting a machine for the production of the product is 600 Taka. The selling price per unit of the product is 1000 Taka. The inventory holding cost per unit per year is calculated as 5% of the selling price per unit. Assuming selling of the product starts from the outset of production and there is no occurrence of shortages of the product, b) Let the cost of inspection is given by 30Q, where $30 is the cost per unit of inspection and the cost of passing defectives is estimated as 12000/Q. i. Find the optimal amount of inspection that minimizes the associated total cost. ii. Find the associated minimal total cost. iii.Find the total costs at Q = 16 and Q = 24 and highlight their relationship with the cost of optimal quantity of inspection.
ABC Company manufactures the product XE-17. The product is sold at a unit price of $70.Variable expenses are $13.50 per unit and fixed expenses are $220,000 per year.Required :a. What should be the product’s CM ratio? b. Calculate the BEP is sales dollars and in units for ABC Company. c. The manager of ABC company estimates that in the coming year, the company’s sales willincrease by $80,000 (from the current sales). How much should the net profit / loss increase/decrease if the fixed costs remain constant? d. The manager of ABC company predicts that by spending an additional $80,000 per year onadvertising and using higher quality raw material (which will in turn increase the raw materialcost per unit by $3), and increasing selling price per unit by 2% (to compensate for theincreased costs), unit sales will increase by two- thirds of the current sales units. Should thecompany go with the manager’s proposed plan? Explain your answer. (Assume that in thecurrent year, the company sold…
ABC Company manufactures the product XE-17. The product is sold at a unit price of $70.Variable expenses are $13.50 per unit and fixed expenses are $220,000 per year.Required :a. What should be the product’s CM ratio? b. Calculate the BEP is sales dollars and in units for ABC Company. c. The manager of ABC company estimates that in the coming year, the company’s sales willincrease by $80,000 (from the current sales). How much should the net profit / loss increase/decrease if the fixed costs remain constant? d. The manager of ABC company predicts that by spending an additional $80,000 per year onadvertising and using higher quality raw material (which will in turn increase the raw materialcost per unit by $3), and increasing selling price per unit by 2% (to compensate for theincreased costs), unit sales will increase by two- thirds of the current sales units. Should thecompany go with the manager’s proposed plan? Explain your answer. (Assume that in thecurrent year, the company sold…
You have developed the following estimates for procuring an item for your manufacturing operations:? is 3,600 units yearly (10 units per day)? is ₱25 per item? is ₱35 per order? is 25% annuallyThe following two (2) options are available for you:Option 1: the supplier can supply all items at once.Option 2: The supplier can supply 15 items per day.Based on the information you have, which of the above options would you prefer?
Consider the following: A factory can produce 150,000 units of a good/year at a cost of $100/unit may produce the good for 2 years Retail price is initially $500/unit, but will either increase or decrease by $100 during year 1, and then subsequently increase or decrease by $200 during year 2. Each year, the increase or decrease is equally likely Fixed costs of running the factory are $50M per year if the factory is implemented (not including rent) Rent is $10M, whether or not the factory is set-up We will assume risk neutrality and a 10% cost of capital For simplicity, we will assume that there is no initial (year 0) cashflow associated with the factory The production technology of the factory allows for flexible starting (but not stopping). This means that in year 1, the factory may be operated or not. If the factory is operational in year 1, it will also be operational in year 2. If the factory is not operational in year 1, then it may either be operated or not in year 2. What is…
Items purchased from a vendor cost $20 each, and the forecast for next year’s demand is 1,000 units. If it costs $5 every time an order is placed for more units and the storage cost is $4 per unit per year, a. What quantity should be ordered each time? b. What is the total ordering cost for a year? c. What is the total storage cost for a year?
BBMLOVESLENI Company operates a fleet of delivery trucks in Luzon. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is P11.40 per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to P13.40 per kilometer. Assuming that in a given year, a truck were driven 80,000 kilometers, what total cost would you expect to be incurred? * A. P1,012,000 B. P1,407,000 C. P1,225,143 D. P1,072,000
Brislin Products has a new product going on the market next year. The following data are projections for production and sales: \table[[Variable costs,$250,000
solve a and b based on data in the images provided. a.What are the minimum and maximum transfer prices for the 12,300 batteries needed in the next 6 months that would be acceptable to the Battery and the Auto Divisions? Why are these the minimum and maximum prices? b.What is the projected total operating income for AMP Industries for the next six months if the internal transfer of the 12,300 batteries takes place at $11,280 per unit? What is AMP Industries’ projected total operating income if the internal transfer does not take place? Assume there is no external market for the batteries produced by the Battery Division.
ETS manufactures a component for its computer products. The annual demand for thiscomponent is 2500 units. The annual cost of maintaining inventory is10% per unit and the cost of preparing an order and setting up productionfor the order is $ 50.The machine used to make this part has a production rate of 10,000units per year and the cost is $ 22 per unit.a. Find the EPQ(Economic Production Quantity)A. How long does it take to produce the batch?B. How many batches will be produced per year?C. What is the maximum inventory level?D. What is the total cost per year?E. A supplier offers to sell a similar component for $ 25 per unit with a charge$ 5 per service per order. Should the company accept the offer?F. Find the average inventory level for each situation
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000