Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 33,500 miles. Management also belleves that the standard deviation is 3,500 miles and that tire mileage isnormally distributed. To promote the new tire, Grear has offered to refund some money if the tire fails to reach 30,000 miles before the tire needs to be replaced. Specifically, for tires with a lifetimebelow 30,000 miles, Grear will refund a customer $1 per 100 miles short of 30,000.(a) For each tire sold, what is the average cost of the promotion (in $)? (Use at least 1,000 trials. Round your answer to two decimal places.)$ 47.57(b) What is the probability that Grear will refund more than $25 for a tire? (Use at least 1,000 trials. Round your answer to three decimal places.)0.043

Introduction The average cost technique determines the cost of inventory items by dividing the total…

Answered: Grear Tire Company has produced a new…

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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Diamond Boot Factory normally sells its specialty boots for $34 a pair. An offer to buy 85 boots for $30 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $12, and special stitching will add another $2 per pair to the cost Determine the differential income or loss per pair of boots from selling to the organization. Should Diamond Boot Factory accept or reject the special offer?
Supersonic Tire Company makes a special kind of racing tire. Variable costs are $210 per unit, and fixed costs are $42,000 per month. Supersonic sells 400 units per month at a sales price of $320. If the quality of the tire is upgraded, the company believes it can increase the price to $350. If so, the variable cost will increase to $220 per unit, and the fixed costs will rise by 20%. If Supersonic decides to upgrade, how will operating income be affected? A. Operating income will increase by $20. B. Operating income will decrease by $400. C. Operating income will decrease by $12,000. D. Operating income will increase by $12,000.
Waterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 60.00 units per day at a unit cost of $6.80, whereas other similar machines are producing twice that much. The units sell for $9.00. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $71,940 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a net loss of $ . Waterways should keep the old i
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Global Lawn, a manufacturer of lawn mowers, predicts that it will purchase 228,000 spark plugs next year. Global Lawn estimates that 19,000 spark plugs will be required each month. A supplier quotes a price of $11.00 per spark plug. The supplier also offers a special discount option: If all 228,000 spark plugs are purchased at the start of the year, a discount of 4% off the $11.00 price will be given. Global Lawn can invest its cash at 10% per year. It costs Global Lawn $260 to place each purchase order. Read the requirements. Requireme Let's begin t Differer Requirements 1. What is the opportunity cost of interest forgone from purchasing all 228,000 units at the start of the year instead of in 12 monthly purchases of 19,000 units per order? C---- 2. Would this opportunity cost be recorded in the accounting system? Why? 3. Should Global Lawn purchase 228,000 units at the start of the year or 19,000 units each month? Show your calculations. 4. What other factors should Global Lawn…
A company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)
Gonzalez Corporation manufactures a children's bicycle, model CT8. Gonzalez currently manufactures the bicycle frame. During 2023, Gonzalez made 30,000 frames at a total cost of $750,000. Ryan Corporation has offered to supply as many frames as Gonzalez wants at a cost of $23.50 per frame. Gonzalez anticipates needing 33,000 frames each year for the next few years. Required Requirement 1. (a) What is the average cost of manufacturing a bicycle frame in 2023? How does it compare to Ryan's offer? The average cost of $ per frame is than Ryan's offer. (b) Can Gonzalez use the answer in requirement 1a to determine the cost of manufacturing 33,000 bicycle frames? Explain. Gonzalez take the average manufacturing cost in 2023 to determine the total cost of manufacturing 33,000 bicycle frames. The reason is that Requirement 2. Gonzalez's cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the bicycle frame as the…
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