**Crane Company's New Manufacturing Method Evaluation**Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs for each method are illustrated in the following table:| Cost Elements | Capital-Intensive | Labor-Intensive ||-------------------------|--------------------------|------------------------|| Direct materials | $6.00 per unit | $7.00 per unit || Direct labor | $7.00 per unit | $10.00 per unit || Variable overhead | $4.00 per unit | $5.50 per unit || Fixed manufacturing costs| $3,200,000 | $2,028,500 |The market research department recommends an introductory unit sales price of $40.00. Selling expenses are estimated at $622,000 annually plus $2.00 for each unit sold, regardless of the manufacturing method.**Break-even Analysis***(a)* Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses the following methods:1. **Capital-intensive manufacturing method.**2. **Labor-intensive manufacturing method.**The break-even points are presented in the table below:| Method | Break-even Point in Units ||-------------------------|---------------------------|| Capital-Intensive | 182,000 || Labor-Intensive | 171,000 |**Indifference Point Analysis***(b)* Determine the annual unit sales volume at which Crane Company would be indifferent between the two manufacturing methods:| Annual Unit Sales Volume| ||-------------------------|---------------------------|This point is where the total costs of both methods would be equal, meaning that the company would not benefit more from one method over the other at this specific sales volume.**Graph and Diagrams**The provided image does not contain any graphs or diagrams. The information has been organized into tables for easier readability and understanding.

Break even point is the optimum point of No profit no loss as at this point the firm is earning a…

Answered: Crane Company has decided to introduce…

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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Paradise Manufacturing currently makes one of its parts for a total cost of $3.80 per unit. This cost is based on a normal capacity of 60,000 units. Variable cost are $2.50 per unit. Fixed cost related to making this part is $30,000. Allocated fixed cost are unavoidable and amount to $30,000. Paradise Manufacturing is considering buying the part for $2.80 per unit. Should the company continue making the part or should they buy the part from the outside supplier? Give a numerical justification for your answer.
Rubber and Steel Company is planning to manufacture a new product. The variable manufacturing costs will be $66 per unit and the fixed costs are estimated to be $6490. The selling price of the product is to be $137 per unit. Variable selling expense is expected to be $16 per unit. (a) Calculate the contribution margin per unit. (b) Determine the contribution rate. (c) Calculate the break-even point in units. (d) Determine the break-even point in sales dollars. (a) The contribution margin per unit is S. (Type a whole number.) (b) The contribution rate is %. (Round to two decimal places as needed.) (c) The break-even point is units. (Round up to the nearest unit.) (d) The break-even point in sales dollars is $. (Type a whole number.)
Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Direct materials Direct labor Variable overhead Fixed manufacturing costs (a) Capital-Intensive $6.00 per unit $7.00 per unit $4.00 per unit $3,200,000 Crane' market research department has recommended an introductory unit sales price of $40.00. The selling expenses are estimated to be $622,000 annually plus $2.00 for each unit sold, regardless of manufacturing method. 1. Capital-intensive manufacturing method. 2. Labor-intensive manufacturing method. Break-even point in units Labor-Intensive $7.00 per unit $10.00 per unit $5.50 per unit Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses the: $2,028,500 Capital-Intensive Labor-Intensive
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 These data are given in the file CoxElectric. Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost rom total revenue. Create a spreadsheet model and construct a 1-way table and determine the breakeven point (use intervals of 10,000 units). Group of answer choices 20,000 - 30,000 10,000 - 20,000 30,000 - 40,000 25,000 30,000 20,000
Please I will need the answer to a and b.
Johnson Marine has the following costs and expected sales for the coming year. Johnson is considering a number of different methods to determine the price of its product. Total Costs Variable Manufacturing $ 2,350,000 Variable Selling and Administrative 750,000 Plant-level Fixed Overhead 1,200,000 Fixed Selling and Administrative 600,000 Batch-level Fixed Overhead 200,000 Total Investment in Product Line 10,000,000 Expected Sales (units) 20,000 If Johnson determines price using a desired gross margin percentage of 50%, the price is:
Galla Incorporated needs to determine a price for a new product. Galla desires a 25% markup on the total cost of the product. Galla expects to sell 5,000 units. Additional information is as follows: Variable Costs per Unit Fixed Costs (total) Direct materials $ 13 Overhead $ 45,000 Direct labor 14 General and administrative 18,000 Overhead 12 General and administrative 18 Using the total cost method what price should Galla charge? Multiple Choice $71.25 $87.00 $82.50 $75.75 $69.60
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $19.20 per pound and costs $14.60 per pound to produce. Product D would sell for $37.80 per pound and would require an additional cost of $8.90 per pound to produce. The differential cost of producing Product D is a.$10.68 per pound b.$7.12 per pound c.$5.34 per pound d.$8.90 per pound Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $31 per pound and costs $26 per pound to produce. Product C would sell for $59 per pound and would require an additional cost of $22 per pound to produce. The differential cost of producing Product C is a.$59 per pound b.$22 per pound c.$31 per pound d.$26 per pound
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. $ $
Birkenstock is considering adding a new Big Buckle sandal to its current product offerings. Birkenstock expects to price the shoes at $125 per pair. The variable costs to produce one pair are estimated to be: $20 per pair direct materials; $25 per pair direct labor; $5 per pair shipping costs and $5 per pair miscellaneous overhead. The fixed costs for this line of shoes are: $50,000 advertising/promotion; $125,000 manufacturing plant manager salary; $350,000 depreciation expense on manufacturing equipment; and $50,000 other miscellaneous fixed costs. • Birkenstock's best guess is that they will sell 12,000 pairs of Big Buckle sandals in 2021. What is Birkenstock's expected 2021 profit on this product? Type your answer in the first blank below.
Finch Modems has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 1,600 pagers. Unit-level manufacturing costs are expected to be $26. Sales commissions will be established at $1.60 per unit. The current facility- level costs, including depreciation on manufacturing equipment ($66,000), rent on the manufacturing facility ($56,000), depreciation on the administrative equipment ($13,800), and other fixed administrative expenses ($74,950), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (pagers) on the basis of the number of units of product made (i.e., 5,600 modems and 1,600 pagers). Required a. Determine the per-unit cost of making and selling 1,600 pagers. (Do not round intermediate calculations. Round your answer to 3 decimal places.)…
Bramble Corp. incurs the following costs to produce 12000 units of a subcomponent: Direct materials $8400 Direct labor 12000 Variable overhead 12000 Fixed overhead 19000 An outside supplier has offered to sell Bramble the subcomponent for $2.15 a unit. No fixed costs are avoidable. If Bramble accepts the offer, it could use the production capacity to produce another product that would generate additional income of $3600. The increase (decrease) in net income from accepting the offer would be O $(3600). $10200. O $(3000). O $3000.

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