Hicom Goods is a distributor of videotapes. View Mart is a local retail outlet whichsells blank and recorded videos. View Mart purchases tapes from Hicom Goods at£3.00 per tape; tapes are shipped in packages of 20. Hicom Goods pays all incomingfreight, and View Mart does not inspect the tapes due to Hicom Goods' reputation forhigh quality. Annual demand is 104,000 tapes at a rate of 4,000 tapes per week. ViewMart earns 20% on its cash investments. The purchase-order lead time is two weeks.The following cost data are available:Relevant ordering costs per purchase orderCarrying costs per package per year:Relevant insurance, materials handling,breakage, etc., per year£90.50£4.50What is the required annual return on investment per package?a.£60.00b.£2.50C.£12.00d. £0.60

Finding the Required Annual Return on Investment per Package for View MartView Mart, a retailer,…

Answered: Hicom Goods is a distributor of…

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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Grouper Taco Palace sells 280 gift cards at $50 per gift card and 140 of the gift cards are redeemed by year-end. Grouper estimates that it will have 10% breakage on its gift cards. Prepare the entry for the gift card redemption and the expected breakage for the gift cards in the current year. (Ignore Cost of Goods Sold.) (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. Round intermediate calculations to 4 decimal places, e.g. 0.2456 and final answers to 0 decimal places, e.g. 5,125) Account Titles and Explanation Debit Credit
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The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base salary. The following data pertains to Shop 48 and is typical of the company's many outlets: Per Pair of Shoes $ 20.00 Selling price Variable expenses: Invoice cost Sales commission Total variable expenses Fixed expenses: Advertising Rent Salaries Total fixed expenses $ 5.00 5.00 $ 10.00 Net operating income Annual $ 36,000 25,000 125,000 $ 186,000 Required: 5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 45 cents commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48's net operating income (loss) if 21,600 pairs of shoes are sold? Note: Do not round intermediate calculations.
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Also, Should Smith accept the special order?
Jordahl's grocery store has a small bakery that sells a variety of baked goods. Sales from the bakery average less than 5 percent of the store's total revenue and is considered a cost center. As a means of attracting customers , the bakery manager has decided to sell a cup of coffee and doughnut combo at low price price of $ 2.00. Incremental material costs associated with each combo sale average 0.50 per donut and $ 0.60 per serving of coffee (including a disposable cup). Incremental labor and overhead costs are expected to average $0.80 per combo sale . What is the contribution margin of a combo sale ? How might the manager think the combo will affect the bakery's responsibility margin ?
A supplier ships goods from Richmond, VA to three market places in 3 cities (Chicago, IL; Athens, GA; St. Luis, MO). The supplier can ship every day, every other day, or every third day. There is a penalty of $0.30/cwt for each day delayed. Consolidating shipments allows for lower transportation costs from larger loads, but incurs penalty costs due to the delay. Transportation Rate (S/cwt) Shipment City Weight/day LTL 50,000 lb 50000 Ib Chicago, IL 18,000 lb (180 cwt) 1.50 1.25 Athens, GA 15,000 lb (150 cwt) 1.35 1.00 St. Luis, MO 12,000 lb (120 cwt) 2.00 1.50 Total 45,000 lb = 450 cwt Find what is the cost for the following: Shipping Every Day Shipping on the alternate Day (every two days) Shipping every three Day
Sequoia Paper Products, Inc., manufactures boxed stationery for sale to specialty shops. Currently, the company is operating at 90 percent of capacity. A chain of drugstores has offered to buy 30,000 boxes of Sequoia’s blue-bordered thank-you notes as long as the box can be customized with the drugstore chain’s logo. While the normal selling price is $6.00 per box, the chain has offered just $3.10 per box. Sequoia can accommodate the special order without affecting current sales. Unit cost information for a box of thank-you notes follows: Direct materials $1.87 Direct labor 0.33 Variable overhead 0.08 Fixed overhead 2.10 Total cost per box $4.38 Fixed overhead is $420,000 per year and will not be affected by the special order. Normally, there is a commission of 5 percent of price; this will not be paid on the special order since the drugstore chain is dealing directly with the company. The special order will require additional fixed costs of $14,300 for the design and…
A6 Kasavu Seed and Herbicide (KoSH) buys 20 litre drums of Rounddown herbicide by the pallet of 50 drums. Each drum sells for $200 and costs $150 landed in the store. About 3000 drums of this size are sold each year. Occasionally (averaging one drum in every 8 pallets) a drum is holed in the store and is unsaleable. It costs $10 additionally to dispose of the holed drum and contents and clean up the mess. Other holding costs average $10 per pallet. Order costs are estimated to be $1.
A company inadvertently produced 3,000 defective MP3 players. The players cost $12 each to produce. A recycler offers to purchase the defective players as they are for $8 each. The production manager reports that the defects can be corrected for $10 each, enabling them to be sold at their regular market price of $19 each. The company should a. Correct the defect and sell them at the regular price. b. Sell the players to the recycler for $8 each. c. Sell 2,000 to the recycler and repair the rest. d. Sell 1,000 to the recycler and repair the rest. e. Throw the players away.
Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon 5,000 $ 182 40 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. 30% Bacon Hessel Hessel 3,000 $198 20 15% The Accounting Department recorded $255,450 as the cost of late deliveries to customers. Effective Cost Per Carton Total 8,000 $ 188 60 25% Exercise 10-38 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Required: Assume that the average quality, measured by the percentage of…
21-2. Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases DVDs from Globe at $28.00 per DVD; DVDs are shipped in packages of 68. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 320,000 DVDs at a rate of 6,900 DVDs per week. DVD Mart earns 13% on its cash investments. The purchase-order lead time is one week. The following cost data are available: Relevant ordering costs per purchase order $119.50 Carrying costs per package per year: Relevant insurance, materials handling, breakage, etc., per year What is the economic order quantity (EOQ)? $5.50 A) 67.41 packages B) 47.14 packages C) 6.10 packages D) 66.67 packages OA OB O C OD

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