Brik, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes: deluxe and standard. Because Brik can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which emphasize. To make this decision, they assemble the following data: E (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,900 machine hours per month. The plant can manufacture either 62 standard electric toothbrushes or 24 deluxe electric toothbrushes per machine hour. Read the requirements. .... Requirement 1. Identify the constraining factor for Brik. Brik's constraint is Requirement 2. Prepare a product mix analysis to show which product line to emphasize. Deluxe Standard Toothbrushes Toothbrushes - X Data table Contribution margin per Per Unit Deluxe Toothbrush Standard Toothbrush Decision: Sales price $ 82 $ 54 22 18 Variable costs Emphasize the Brik standard electric toothbrush $ 60 $ 36 Contribution margin Gontrihution margin ratio 73.2% 66.7%

Brik, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes: deluxe and standard. Because Brik can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which emphasize. To make this decision, they assemble the following data: E (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,900 machine hours per month. The plant can manufacture either 62 standard electric toothbrushes or 24 deluxe electric toothbrushes per machine hour. Read the requirements. .... Requirement 1. Identify the constraining factor for Brik. Brik's constraint is Requirement 2. Prepare a product mix analysis to show which product line to emphasize. Deluxe Standard Toothbrushes Toothbrushes - X Data table Contribution margin per Per Unit Deluxe Toothbrush Standard Toothbrush Decision: Sales price $ 82 $ 54 22 18 Variable costs Emphasize the Brik standard electric toothbrush $ 60 $ 36 Contribution margin Gontrihution margin ratio 73.2% 66.7%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

I need answers to question 4 and 5. Please make it very clear. Neptune Company has developed a small inflatable toy that it is anxious to introduce to its customers. The company’s Marketing Department estimates that demand for the new toy will range between 10,000 units and 35,000 units per month. The new toy will sell for $9.00 per unit. Enough capacity exists in the company’s plant to produce 15,000 units of the toy each month. Variable expenses to manufacture and sell one unit would be $5.00 , and incremental fixed expenses associated with the toy would total $32,000 per month. Neptune has also identified an outside supplier who could produce the toy for a price of $4.00 per unit plus a fixed fee of $29,000 per month for any production volume up to 15,000 units. For a production volume between 15,001 and 35,000 units the fixed fee would increase to a total of $58,000 per month. Required: 1. Calculate the break-even point in unit sales assuming that Neptune does not hire the…
Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding. Coram has manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local outfitter that manufactures and sells backpacks, tent cases, and so on, contacted Coram and proposed that they produce the headphone travel cases. Based on management experience, Coram's cost per travel case is as follows (based on annual production of 40,000 units). Direct materials Direct labor Variable overhead Fixed overhead Total HTG has offered to sell the case to Coram for $39 each. The total order would amount to 40,000 travel cases per year. Coram's management decides that they will make the switch to HTG cases if Coram can save at least $12,000 per year. Accepting the offer would eliminate annual fixed overhead of $76,000. Required: a. Prepare a schedule that shows the total differential costs. b. Should Coram continue to make the travel cases or buy them from HTG? $ 10.00 21.20…
Johnson Corp. has two divisions, Division A and Division B. Division B has asked Division A to supply it with 5,000 units of part WD26 this year to use in one of its products. Division A has the capacity to produce 25,000 units of part WD26 per year. Division A expects to sell 21,000 units of part WD26 to outside customers this year at a price of $20.00 per unit. To fill the order from Division B, Division A would have to cut back its sales to outside customers. Division A's variable manufacturing cost (direct labor + direct material + variable overhead) for part WD26 is $12.00 per unit. The variable selling cost when selling to outside customers is $2.00 per unit. This variable selling cost would not have to be incurred on sales of the parts to Division B. Q. Calculate Division A's minimum acceptable transfer price. A. $
Clearview Window Company manufactures windows for the home-building industry. The window frames are produced in the Frame Division. The frames are then transferred to the Glass Division, where the glass and hardware are installed. The company’s best-selling product is a three-by-four-foot, doublepaned operable window. The Frame Division also can sell frames directly to custom home builders, who install the glass and hardware. The sales price for a frame is $80. The Glass Division sells its finished windows for $190. The markets for both frames and finished windows exhibit perfect competition. The standard variable cost of the window is detailed as follows: Frame Division Glass Division Direct material $ 15 $ 30 * Direct labor 20 15 Variable overhead 30 30 Total $ 65 $ 75 *Not including the transfer price for the frame. Assume that there is no excess capacity in the Frame Division. Required: 1-a. Use the general rule to compute the transfer price for window frames. 1-b. Calculate the…
2) Your firm (a shampoo maker) has decided to enter a new industry: Doughnuts. Bubbles Doughnuts will compete with Dunkin Donuts and Krispy Kreme. You will try to exploit your current customer base, women who like to pamper themselves and secretly eat a lot of doughnuts. There will be 25 locations. The combined land and construction cost for all 25 sites will be $20million. Construction will be completed in one year. The land is approximately one quarter of the cost and cannot be depreciated. The remaining fixed costs will be depreciated 20 year, straight line. After twenty years of operation, you will exit the business. You anticipate the doughnut shops to have no salvage value but the land can be sold for $7m (net, so after all relevant taxes have been paid). When you open for business after construction is complete, each shop is expected to average sales of $2m/yr. and have operating costs of $1.8m/yr. over its twenty-year life (both of these are end of year figures). The entire…
BeLuxe Company manufactures a variety of natural skin care products that are used in spas across Canada. Its most popular product is its “Cleopatra Gold” serum, made with locally produced ingredients. Currently, the company is operating at about 80 percent capacity, and is quite profitable. BeLuxe has been approached by a distributor in South Korea, asking to purchase 8,000 units of the serum, at a price of $40 per unit. BeLuxe’s product cost for each unit of Cleopatra Gold serum includes the following: Direct materials $ 16 Direct labour 10 Variable manufacturing overhead 8 Fixed manufacturing overhead 15 Total manufacturing cost $49 BeLuxe will save $2 per unit in sales commission costs on this order as it has come directly from the customer, and the distributor will cover all shipping costs. Currently, the serum is sold for $65 to its other customers. Production management believes that it can handle the special order without disrupting its…
Vamoose plc is a company based in the Teeside which manufactures components for the motorised scooter and bicycle industry. Vamoose’s Research and Development unit has recently developed an innovative new product for which there is considerable market demand. The production of this new product represents a major shift in Vamoose’s strategic direction as a company. Subsequently, the company is now planning to acquire a piece of equipment to manufacture the new product. The equipment will cost £6,600,000 and is expected to last for 5 years with an estimated scrap value of £2,300,000. Management expects to produce 160,000 units per annum (p.a.) of the new product, which will be sold for £68 per unit in the first year. Production costs per unit (at current prices) are as follows: Materials: £28.50 Labour: £24.40 Materials are expected to inflate at 8.5% p.a. and labour is expected to inflate at 6.5% p.a. Fixed overheads of the company currently amount to £1,370,000. These are not expected…
Yardwork Tools Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are as follows: Expected annual sales of tools (in units) 660,000 Average selling price of tools $11 Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) 27,300 Current exchange rate 9,100 NTD = $1 Variable manufacturing costs $2.85 per unit Incremental annual fixed manufacturing costs associated with the new product line $310,000 Variable selling and distribution costsª $0.50 per unit Annual fixed selling and distribution costsª $250,000 ªSelling and distribution costs are the same regardless of whether the tools…
Desks Unlimited makes all types of office desks. The Computer Desk Division is currently producing 10,000 desks per year with a capacity of 15,000 desks. The variable costs assigned to each desk are $400 and annual fixed costs of the division are $900,000. The computer desk has a market price of $600. The Executive Division wants to buy 5,000 desks from the Computer division at $460 for its custom office design business. The Computer Division manager knows that the division will save $50 of the Variable costs since there will be no variable shipping or commissions to be paid on the transfer order. However, the Computer Desk manager refused the order because the price is below full cost. The Executive Division manager argues that the order should be accepted because it will lower the fixed cost per desk from $90 to $60 and will take the division to its capacity, thereby causing operations to be at their most efficient level. [This is how he came up with the offered $460 transfer…
The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a market price of $103 each. Each trailer incurs $38 of variable manufacturing costs. The Trailer division has capacity for 29,000 trailers per year and has fixed costs of $480,000 per year. 1. Assume the Assembly division of Baxter Bicycles wants to buy 5,200 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers (and has no excess capacity), what price should be used on transfers between divisions? 2. Assume the Trailer division currently only sells 10,200 trailers to outside customers and has excess capacity. The Assembly division wants to buy 5,200 trailers per year from the Trailer division. What is the range of acceptable prices on transfers between divisions? 1. Transfer price per trailer 2. Transfer price per trailer will be at least but not more than
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?
We Can Reach It produces ladders for household use. The company makes two types: step ladders and 12-foot adjustable ladders. Demand for the products is so high that We Can Reach It can sell as many of each size as it can produce. The company uses the same machinery to produce both products. The machinery can only run for 1,990 hours per period. We Can Reach It can produce 12, 12-foot ladders every hour, whereas it can produce 16 step ladders in the same amount of time. Fixed costs amount to $120,800 per period.Sales prices and variable costs are as follows: Step ladder 12-foot ladder Sales price per unit $21.70 $37.00 Variable cost per unit $8.75 $23.30 Contribution Margin per unit 1. Calculate the Contribution Margin per machine hour. Step ladder 12-foot ladder Ladders produced per hour Contribution margin per ladder type Contribution margin per machine hour 2. To maximize profit, which product should they emphasize: 3. What will the…