Cobe Company nas manufactured 200 partially finished cabinets at a cost of $50,000, These can be sold as is for $60,000. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $12.000, and the Tinished cabinets could be sold for $80,000. (a) Prepare a sell as is or process further analysis of income effects. (b) Should the cabinets be sold as is or processed further and then sold? O Answer is complete but not entirely correct. (a)Sell or Process Analysis Process Further Sell As is Revenue 00,000 Os s0.000 Costs 02000 O 12.000 O Income 10.000 Os 18.000 O Incrementa income (loss) to process further 8,000 (b) The company should Process further

Cobe Company nas manufactured 200 partially finished cabinets at a cost of $50,000, These can be sold as is for $60,000. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $12.000, and the Tinished cabinets could be sold for $80,000. (a) Prepare a sell as is or process further analysis of income effects. (b) Should the cabinets be sold as is or processed further and then sold? O Answer is complete but not entirely correct. (a)Sell or Process Analysis Process Further Sell As is Revenue 00,000 Os s0.000 Costs 02000 O 12.000 O Income 10.000 Os 18.000 O Incrementa income (loss) to process further 8,000 (b) 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

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Markland Manufacturing manufactures desk lamps intends to increase capacity by obtaining new equipment. Two vendors have presented proposals. The purchase cost for proposal A is $30,000, and for proposal B, $80,000. Each proposal will produce lamps of the same quality. Proposal A is expected to produce lamps at $15.00/lamp, while proposal B is significantly more efficient and will produce them at $10.00/lamp. The revenue generated by the sale of each lamp is $20.00/unit. A. What is the point of indifference?B. The manufacturer expects to sell 12,000 lamps and has informed the vendors that it has chosen proposal B. The vendor of proposal A has offered to re-negotiate the purchase price of its proposal in order to win the contract. What purchase price will cause the manufacturerto reconsider its decision?
A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. a) What is the break-even point for the manual process (in units)? b) What is the break-even point for the mechanized process (in units)? c) A point of indifference for two processes is quantity at which each process generates the same amount of profit (review video). What is the point of indifference for the two processes? (Hint: 1) Use equations to set profit of manual process equal to mechanized process and solve for quantity; 2) (Excel) If you have a break-even for each process - have only one cell that represents quantity that be used to calculates costs/revenues for each process and use Goal…
"Nova Company has 2,000 obsolete light fixtures that are carried in inventory at a manufacturing cost of Ph 30,000. If the fixtures are reworked for Ph 10,000 if could be sold for Ph 18,000. Alternately, the light fixtures could be sold for Ph 3,000 to a jobber located in a distant city. In a decision model analyzing these alternatives, the opportunity cost would be Ph 3,000 Ph 10,000 Ph 13,000 Ph 30,000
Novak Inc. makes unfinished bookcases that it sells for $60. Production costs are $38 variable and $10 fixed. Because it has unused capacity, Novak is considering finishing the bookcases and selling them for $72. Variable finishing costs are expected to be $9 per unit with no increase in fixed costs. Prepare an analysis on a per-unit basis that shows whether Novak should sell unfinished or finished bookcases. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Net Income Sell Process Further Increase (Decrease) $ $ $ Sales per unit Variable cost per unit Fixed cost per unit Total per unit cost $ Net income per unit The bookcases processed further. $ $
National Chemical Company manufactures a chemical compound that is sold for $53 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $87 per gallon. National expects the market for the new compound variant to be 8,700 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $174,000. Required: a. What would be the effect on total profit if National produces the new compound variant? b. Should National produce the new compound variant? Complete this question by entering your answers in the tabs below. Required A Required B What would be the effect on total profit if National produces the new compound variant? If National produces the new compound, profit will by
Graham Corporation has 1,000 cartons of oranges that were harvested at a cost of $30,000. The oranges can be sold as is for $35,760. The oranges can be processed further into orange juice at an additional cost of $12,950 and be sold at a price of $52,300. The incremental income (loss) from processing the oranges into orange juice would be: Multiple Choice $16,540. $(16,540). $(3,590). $3,590. $39,350.
Cox Electric makes electronic components and has estimated the following for a new design of one of its products: Fixed Cost $10,000 Material cost per unit = $0.15 Labor cost per unit = $0.10 Revenue per unit = $0.65 Show Transcribed Text Implement your model from part (b) in Excel using the principles of good spreadsheet design and find the profit if Cox Electric makes 18,000 new product. If required, round your answer to nearest whole number. For subtractive or negative numbers use a minus sign. (Example: -300)
Product T is produced for $5.90 per pound. Product T can be sold without additionalprocessing for $7.10 per pound, or processed further into Product U at an additionalcost of $0.74 per pound. Product U can be sold for $8.00 per pound. Prepare and show in solution a differential analysis dated August 2 on whether to sell Product T (Alternative 1) or process further into Product U (Alternative 2).
A company produces wooden tables. The company has fixed costs of $1600, and it costs an additional $50 per table. The company sells the tables at a price of $157 per table. If the company needs to earn a profit of $7200, how much money in costs should it be prepared to cover? It should be prepared to cover Round to the nearest whole number.
A manager is trying to decide whether to purchase a certain part or to have it produce internally. Internal production could use either of two processes. One would entail a variable cost of P17 per unit and an annual fixed cost of P200,000, the other would entail a variable cost of P14 per unit and an annual fixed cost of 240,000. Three vendors are willing to provide the part. Vendor A has a price of P20 per unit for any volume up to 30,000 units. Vendor B has a price of P22 per unit for demand of 1,000 units less, and P18 per unit for larger quantities. Vendor C offers a price of P21 per unit for the first 1,000 units, and P19 per unit for additional units. Required: If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint?
Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-O. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,000 after processing costs of $30,000. A batch of ALT-2 can be sold for $240,000 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Processing cost hs