Cullumber's Candles will be producing a new line of dripless candles in the coming years and has the choice of producing the candles in a large factory with a small number of workers or a small factory with a large number of workers. Each candle will be sold for $10. If the large factory is chosen, the cost per unit to produce each candle will be $3.60. The cost per unit will be $7.50 in the small factory. The large factory would have fixed cash costs of $2.30 million and a depreciation expense of $300,000 per year, while those expenses would be $470,000 and $100,00O, respectively, in the small factory. Calculate the pretax operating cash flow break-even point for both factory choices for Cullumber's Candles. (Round answers to nearest whole units e.g. 152.) pretax operating cash flow breakeven point for the large factory is units and for the small factory is

Cullumber's Candles will be producing a new line of dripless candles in the coming years and has the choice of producing the candles in a large factory with a small number of workers or a small factory with a large number of workers. Each candle will be sold for $10. If the large factory is chosen, the cost per unit to produce each candle will be $3.60. The cost per unit will be $7.50 in the small factory. The large factory would have fixed cash costs of $2.30 million and a depreciation expense of $300,000 per year, while those expenses would be $470,000 and $100,00O, respectively, in the small factory. Calculate the pretax operating cash flow break-even point for both factory choices for Cullumber's Candles. (Round answers to nearest whole units e.g. 152.) pretax operating cash flow breakeven point for the large factory is units and for the small factory is

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

Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitri's normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitri's other operations. PLEASE NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). 1. If Dimitri accepts the offer, what will be the impact on profits of accepting the order? • Incremental dollar amount = o Increase or Decrease? no quotes. Please note: Your answer is either "Increase" or "Decrease" - capital first letters and
Mesa Verde manufactures unpainted furniture for the do-it-yourself (DIY) market. It currently sells a table for $75. Production costs per unit are $40 variable and $10 fixed. Mesa Verde is considering staining and sealing the table to sell it for $100. Unit variable costs to finish each table are expected to be an additional $19 per table, and fixed costs are expected to be an additional $3 per table.Prepare an analysis showing whether Mesa Verde should sell stained or finished tables. Please solve this if any more information is needed let me know.
FAE Technologies is deciding whether it should begin production of a new toy robot. It has manufactured children’s toys before but nothing as advanced as its latest robot so historical data is at a minimum. The company believes that they can secure the materials for manufacture for between $65-85 per unit and labor costs would be between $15-25 per unit. Management’s expectations are that materials will cost $70 per unit and labor $25 per unit and that 800 units will be sold monthly. Should FAE decide to manufacture the robots in-house, maintenance of the factory machine would cost $15,000 per month. However, management has found that another alternative is for the company to outsource the labor for a flat rate of $35 per unit. The company expects to sell between 750-1000 units per month initially at a price of $149. Provide recommendations for FAE technologies that will maximize profit. Also include base, worst, and best case scenario calculations and provide a scenario summary. Be…
Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its online website. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (b) When is target costing particularly helpful in deciding whether to produce a given product?
Syntech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,400 per month in fixed costs. Syntech sells 100 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $45 per unit of variable costs, plus an increase in fixed costs of $900 per month. The current price of the camera is $170. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings? Price to be charged Feedback
Go Fly A Kite is considering making and selling custom kites in two sizes. The small kites would be priced at $12.00 and the large kites would be $25.00 The variable cost per unit is $5.80 and $12.60, respectively. Jill, the owner, feels that she can sell 3,350 of the small kites and 1,925 of the large kites each year. The fixed costs would be $2,120 a year and the depreciation expense is $1,650. The tax rate is 34 percent. What is the annual operating cash flow? Multiple Choice $28,063 $15,018 O $31224 $28.624 $30,023
Mighty Safe Fire Alarm is currently buying 58,000 motherboards from MotherBoard, Inc., at a price of $63 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $31 per unit; direct labor, $10 per unit; and variable factory overhead, $14 per unit. Fixed costs for the plant would increase by $89,000. Which option should be selected and why? Oa. make, $464,000 increase in profits Ob. buy, $89,000 increase in profits Oc. make, $375,260 increase in profits Od. buy, $375,260 increase in profits
Hansaben
Whitmore Glassware makes a variety of drinking glasses and mugs. The company's designers have discovered a market for a 16 ounce mug with college logos. Market research indicates that a mug like this would sell well in the market priced at $26.65. Whitmore only introduces a product if they can an operating profit of 30 percent of costs. Required: What is the highest acceptable manufacturing cost for which Whitmore would be willing to produce the mugs? (Round your answer to 2 decimal places.) Highest acceptable manufacturing costs
Mighty Safe Fire Alarm is currently buying 55,000 motherboards from MotherBoard, Inc., at a price of $67 per board. Mighty Safe is considering making its own boards: The costs to make the board are as follows: direct materials, $34 per unit; direct labor, $11 per unit; and variable factory overhead, $16 per unit. Fixed costs for the plant would increase by $86,000. Which option should be selected and why? a. buy, $244,200 increase in profits O b. buy, $86,000 increase in profits Oc. make, $244,200 increase in profits Od. make, $330,000 increase in profits