Cobe Company has already manufactured 18,000 units of Product A at a cost of $20 per unit. The 18,000 units can be sold at this stage for $480,000. Alternatively, the units can be further processed at a $260,000 total additional cost and be converted into 5,600 units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $105 and for Product C is $53. 1. Prepare an analysis that shows whether the 18,000 units of Product A should be processed further or not? Sales Relevant costs: Total relevant costs Income (loss) Sell as is Incremental net income (or loss) if processed further The company should Process Further

Cobe Company has already manufactured 18,000 units of Product A at a cost of $20 per unit. The 18,000 units can be sold at this stage for $480,000. Alternatively, the units can be further processed at a $260,000 total additional cost and be converted into 5,600 units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $105 and for Product C is $53. 1. Prepare an analysis that shows whether the 18,000 units of Product A should be processed further or not? Sales Relevant costs: Total relevant costs Income (loss) Sell as is Incremental net income (or loss) if processed further The company should Process Further

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

A company produces two produces two products (product A&B) and is currently planning its production mix for the next operating period. The maximum demand of product A is 2,000 units whiles that of product B is also 2,000 units however, the total raw materials required for producing both products is only 60,000kg. The estimated cost, sales and production data of the two products are given below: PRODUCT (A) PRODUCT (B) GHC GHC 140.00 Direct material:@GHØ10per kg Direct labor:@GHC30per hour 90.00 Fixed Overhead 20.00 20.00 Variable overhead:@GHØ40 per hour 80.00 120.00 Total cost per unit 400.00 370.00 Add profit 50.00 30.00 Selling price per unit 450.00 400.00 Assuming you are the management accountant of this company, advice management on the most profitable mix. 240.00 60.00 1
KGM Inc. has fixed costs of $500,000. When 50,000 units are produced, the total costs (both fixed and variable) amount to $650,000. What would be the total costs at a production level of 75,000 units? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) Group of answer choices $725,000 $500,000 $750,000 $225,000
Jov Co sells three products: A, B and C. It can either make the products itself or purchase them from a subcontractor. The following information is available: Machine hours to manufacture Product A B C O 0 O 2,500 5 3 2 O 4,500 Variable cost ($) 30 20 15 For the coming period, Jov Co has received orders from its customers for 5,000 units of each product but it only has 20,000 machine hours available. What is the optimum number of units of product B which Jov Co should purchase from the subcontractor? O 5,000 Purchase cost from subcontractor ($) 40 35 20
A company produces two products (product A &B) and is currently planning its production mix for the next operating period. the maximum demand of product A is 2,000 units whiles that of product B is also 2,000 units however, the total raw materials required for producing both products is only 60,000kg. the estimated cost, sales and production data of the two products are given below; product(A) Product(B) Direct material:@GH¢10per Kg 240.00 140.00 Direct labor:@GH¢30 per hour 60.00 90.00 fixed overhead 20.00 20.00 variable overhead:@GH¢40 per hour 80.00 120.00 total cost per unit 400.00 370.00 Add profit 50.00 30.00 selling price per unit…
Salam's company expects its production of pipes will require 600,000 tons of aluminum over its planning period . Demand for pipes products is stable over time. Ordering costs amount to an average of $ 15.00 per order. Holding costs are estimated at $1.4 per ton of aluminum. Find the following : Economic order quantity (EOQ) is
Zycon has produced 10,000 units of partially finished Product A. These units cost $15,000 to produce, and they can be sold to another manufacturer for $20,000. Instead, Zycon can process the units further and produce finished Products X, Y, and Z. Processing further will cost an additional $22,000 and will yield total revenues of $35,000. Place an X in the appropriate column to identify whether the item is relevant or irrelevant to the sell or process further decision.
Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity and that Division A can avoid variable selling cost per unit of P4 but will incur a one-time fixed cost of P30,000 for the order, what is the minimum acceptable transfer price to Division A? Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? What is the maximum acceptable transfer…
Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is five units per hour. The machine’s capacity is 2,600 hours per year. Both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 4,420 units of Product TLX and 5,995 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. $ per unit Product TLX Product MTV Selling price per unit $ 11.50 $ 6.90 Variable costs per unit 3.45 4.14 Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit contribution margins to 2 decimal places.)
Jade Ltd. manufactures a product, which regularly sells for $67.75. This product has the following costs per unit at the expected production of 47,500 units: Cost Amount Direct labour $20.00 Direct materials 10.50 Manufacturing overhead (36% is variable) 24.00 The company has the capacity to produce 52,250 units. A wholesaler has offered to pay $77 for 12,000 units. If Jade Ltd. accepts this special order, operating income would increase (decrease) by how much?
Tom's Toolery is operating at 70% of its productive capacity. It is currently paying $23 per unit for a part used in its manufacturing operation. Tom's estimates it could make the part internally for a total cost of $26 per unit, consisting of $19 of unit-level production costs and $7 of facility-level costs that are currently attributed to other products. Tom's usually purchases 51,000 units of the part each year. These units could be manufactured using Tom's excess capacity. What is the effect on cost if the company decides to start making the part? Multiple Choice $204,000 cost decrease $102,000 cost increase $204,000 cost increase $1,020,000 cost increase
Cobe Company has already manufactured 22,000 units of Product A at a cost of $15 per unit. The 22,000 units can be sold at this stage for $460,000. Alternatively, the units can be further processed at a $220,000 total additional cost and be converted into 5,100 units of Product B and 11,600 units of Product C. Per unit selling price for Product B is $103 and for Product C is $52. 1. Prepare an analysis that shows whether the 22,000 units of Product A should be processed further or not? Sales Relevant costs: Total relevant costs Income (loss) Sell as is $ 460,000 Incremental net income (or loss) if processed further The company should Process Further
Dinesh