mn1 Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period justended when the company produced and sold 42,000 speaker sets:SalesVariable costsFixed costs$3,444,000861,0002,310,000Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected toaverage $18.00 per set; annual fixed costs are anticipated to be $1,988,000. (In the following requirements, ignore income taxes.)Required:1. Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming thatmanufacturing operations remain in the United States.2. Determine the break-even point in speaker sets if operations are shifted to Mexico.3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.a. If variable costs remain constant, by how much must fixed costs change?b. If fixed costs remain constant, by how much must unit variable cost change?4. Determine the impact (increase, decrease, or no effect) of the following operating changes.Complete this question by entering your answers in the tabs below.Required 1Required 2 Required 3Required 4Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming thatmanufacturing operations remain in the United States. (Do not round intermediate calculations and round your final answersto nearest whole dollar.)Current income$273,000Required dollar sales$ 3,717,000

Contribution Margin Approach :The contribution margin is computed as the selling price per unit,…

Answered: Houston-based Advanced Electronics…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter20: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 3CMA: Bolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and...

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Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of 1,350 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of 900 per unit. a. If a transfer price of 1,000 per unit is established and 75,000 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would Ziegler Inc.s total operating income increase? b. How much would the Instrument Divisions operating income increase? c. How much would the Components Divisions operating income increase?
Wellington, Inc., reports the following contribution margin income statement for the month of May. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $10 but will increase fixed costs by 20%. Prepare a projected contribution margin income statement for Wellington, Inc., assuming it purchases the new equipment. Assume sales level remains unchanged.
Bolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and variable costs for the current year are as follows: Bolgers total fixed costs aggregate to 360,000. Bolgers labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement on its break-even point in units. The controller performed a sensitivity analysis to ascertain the estimated effect of a 10-per-unit direct labor increase and a 10,000 reduction in fixed costs. Based on these data, the break-even point would: a. decrease by 1,000 units. b. decrease by 125 units. c. increase by 375 units. d. increase by 500 units.
Keleher Industries manufactures pet doors and sells them directly to the consumer via their web site. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
Markham Farms reports the following contribution margin income statement for the month of August. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $2 but will increase fixed costs by 15%. Prepare a projected contribution margin income statement for Markham Farm assuming it purchases the new equipment. Assume sales level remains unchanged.
Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 44,000 speaker sets: Sales Variable costs $3,608,000 902,000 2,310,000 Fixed costs Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,986,000. (In the following requirements, ignore income taxes.) Required: 1. Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. 2. Determine the break-even point in speaker sets if operations are shifted to Mexico. 3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States. a. If variable costs remain constant, by how much must fixed costs change?…
Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42,000 speaker sets: Sales $ 3,360,000 Variable costs 840,000 Fixed costs 2,280,000 Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18 per set; annual fixed costs are anticipated to be $1,984,000. (In the following requirements, ignore income taxes.) Required: Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. Determine the break-even point in speaker sets if operations are shifted to Mexico. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States. If variable costs remain constant, by how…
Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42,000 speaker sets: Sales $ 3,528,000 Variable costs 882,000 Fixed costs 2,310,000 Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,988,000. (In the following requirements, ignore income taxes.) Required:1. Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States.2. Determine the break-even point in speaker sets if operations are shifted to Mexico.3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.a. If variable costs remain constant, by…
A company is analyzing a make-versus-purchase situation for a component used in several products, and the engineering department has developed these data:Option A: Purchase 10,000 items per year at a fixed price of $8.50 per item. The cost of placing the order is negligible according to the present cost accounting procedure. Option B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials = $5.00 per item and direct labor = $1.50 per item. Manufacturing overhead is $3.00 per item. Based on these data, should the item be purchased or manufactured?
Office Expert Inc. produces a component which is required for manufacturing many of its appliances. The monthly production data for the component are as follows: Monthly Production Data for Component Production Data Amounts Number of units produced 2,500 units Variable costs per unit $10 per unit Total monthly fixed costs (allocated) $18,000 The company received an offer from a foreign supplier to purchase the component for $15 per unit. The monthly fixed costs are unavoidable. However, if Office Expert decides to purchase the component, they can use the freed manufacturing space to earn an additional revenue of $20,000 per month. If Office Expert decides to purchase from the foreign supplier, monthly operating income would – Group of answer choices Decrease by $24,000 Increase by $7,500 Increase by $25,500 Decrease by $12,500
Finch Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,400 6,000 4,000 11,400 27,300 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Finch for $2.70 each. Required a. Calculate the total relevant cost. Should Finch continue to make the containers? b. Finch could lease the space it currently uses in the manufacturing process. If leasing would produce $11,000 per month, calculate the total avoidable costs. Should Finch continue to make the containers? a. Total relevant cost Should Finch continue to make the containers? b. Total avoidable cost Should Finch continue to make the containers?

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