general account Faber Corporation, a basketball hoop manufacturing firm inHickory, Indiana, plans to branch out and begin producingbasketballs in addition to basketball hoops. It has a choice of twodifferent production methods for basketballs. Method 1 will havevariable costs of $6 per ball and fixed costs of $700,000 for thehigh-tech machinery, which requires little human supervision.Method 2 employs many people to hand-sew the basketballs. It hasvariable costs of $16.50 per ball, but fixed costs are estimated to beonly $100,000. Regardless of which method CEO Norman Dalechooses, the basketballs will sell for $30 each. Marketing researchindicates sales in the first year will be 50,000 balls. Sales volume isexpected to increase to 60,000 in year 2.Calculate the sales revenue expected in years 1 and 2.

Step 1: Understanding Sales RevenueSales Revenue represents the total money earned from selling a…

Answered: Faber Corporation, a basketball hoop…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 7EB: Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has...

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Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs. Required Computation for 10,000 units What amount should have been inccrued if company produce 10,000 units What amount should have been inccrued if company purhcase 10,000 units from outside What amount company save if company make 10,000 cushions
Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass that it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $160,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $353 $253 $133 Unit variable cost (278) (207) (117) Unit contribution margin $ 75 $ 46 $ 16 Autoclave hours per unit 6 4 2 Total process hours per unit 12 8 6 Budgeted units of production 2,600 2,600 2,600 a. Determine the contribution margin by glass type and the total company operating income for the budgeted units of production. Large Medium Small Total Units…
Riders, Ltd. is a manufacturer that produces motorized scooters. Currently, it is producing the motor used to power the scooter, but is considering buying the motor from an outside supplier. The manufacturing costs for Riders to make 20,000 motors are as follows: Cost per motor Direct material $28.50 Direct labor $13.25 Overhead $18.00 An outside supplier offers to supply Riders with all the motors it needs at $55.00 per unit. If Riders buys the motors from the supplier, it will still incur 80% of its overhead costs. Based on the above information, the financial advantage (disadvantage) of buying the 20,000 motors from the outside supplier is: a. ($265,000) b. None of the other answers are correct c. $95,000 d. ($193,000) e. $23,000
If DF sells three Masoline for each Aldernite, how many doors of each type would it produce and sell? What would be the total contribution margin?
Mohave Corporation is considering outsourcing production of the umbrella tote bag included with some of its products. The company has received a bid from a supplier in Vietnam to produce 8,900 units per year for $7.50 each. Mohave the following information about the cost of producing tote bags: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per unit Mohave determined all variable costs could be eliminated by outsourcing the tote bags, while 70 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specific use in mind for the space currently dedicated to producing the tote bags. Required: 1. Compute the difference in cost between making and buying the umbrella tote bag. 2. Based strictly on the incremental analysis, should Mohave buy the tote bags or continue to make them? 3-a. Suppose the space Mohave currently uses to make the bags could be utilized by a new product line that would generate $12,000 in…
Mitus Company needs 20,000 special buckles for a backpack that it designs and manufactures. If the company buys the buckles from a buckle company, it will have idle capacity in its plant that cannot otherwise be used. The company factory space is sufficient to make the buckle if that is the logical choice. Indirect fixed manufacturing overhead is 80% of fixed overhead and will be incurred whether the buckles are purchased or manufactured by the company. The relevant costs of making and buying the buckles are as follows: Cost to make the buckles: Direct materials $ 3 Direct labor 4 Variable manufacturing overhead 2 Fixed manufacturing overhead (direct and indirect) $14 Cost to buy from a buckle company $11 Make Purchase Variable Costs Direct Fixed Costs Purchase Price Total Costs Savings per unit Units Total Savings 20000
If DF sells three Masoline for each Aldernite, how much would production and contribution margin increase if the assembly department could get 780 more labor hours at $15 per hour?
Stan Fawcett's company currently purchases a gear assembly from Salt Lake Supply, Inc., at $3.80 per unit with a minimum order of 3,000 units. Stan is considering instead producing the gear assembly himself. He estimates that producing it himself will cost $12,000 to set up the process and then $1.82 per unit for labor and materials. a) Using the line drawing tool, add the total cost graph for Stan to produce the assembly instead of purchasing from Salt Lake Supply. Total cost for the purchase option is already plotted. Properly label your line. Note: Carefully follow the instructions above and only draw the required object. Cost 40,000- ¡Minimum Order 36,000 32,000- 28,000- 24,000 20,000- 16,000 12,000 - 8,000- 4,000- 0+ 0 2,000 4,000 Quantity 6,000 8,000
Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass that it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $85,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $184 $160 $100 Unit variable cost 130 120 76 Unit contribution margin $ 54 $ 40 $ 24 Autoclave hours per unit 3 2 1 Total process hours per unit 5 4 2 Budgeted units of production 3,000 3,000 3,000 Second Add the following information and answer the question below: Youngstown has 1,700 autoclave hours and no more. Maximum consumer demand for the 3 products is: Large = unlimited, Medium…
Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass that it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $283,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $71 $297 $432 Unit variable cost (56) (243) (380) Unit contribution margin $ 15 $ 54 $ 52 Autoclave hours per unit 2 6 4 Total process hours per unit 4 12 12 Budgeted units of production 5,200 5,200 5,200 a. Determine the contribution margin by glass type and the total company operating income for the budgeted units of production. Large Medium Small Total Units…
Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $293,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $179 $396 $191 Unit variable cost 141 324 168 Unit contribution margin $ 38 $72 $23 Autoclave hours per unit 4 6 2 Total process hours per unit 12 12 6 Budgeted units of production 4,900 4,900 4,900 a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. Large Medium Small Total Units produced fill in the blank 1 fill in the blank 2…
Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass that it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $301,000 for the company as a whole. In addition, the following information is available about the three products: Line Item Description Large Medium Small Unit selling price $94 $253 $498 Unit variable cost (74) (207) (438) Unit contribution margin $ 20 $ 46 $ 60 Autoclave hours per unit 2 4 6 Total process hours per unit 6 12 12 Budgeted units of production 5,300 5,300 5,300 a. Determine the contribution margin by glass type and the total company operating income for the budgeted units of production. Line Item Description Large Medium Small Total…

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