Jaycee Manufacturing, which produces electrical components, is contemplating submitting a bid for 30,000 units of item no. 54. The bid's cost will be follows: $ 75,000 120,000 150,000 3,000 5,000 12,000 $365,000 Raw materials Direct labor Manufacturing overhead Additional set-up costs Special device Allocated administrative overhead Total cost The special device will be purchased for this job and once the job is completed, the device will be discarded. Jaycee applies total manufacturing overhead of $5 to each unit (0.5 machine hours at $10 per hour). This figure is based, in part, on budgeted yearly fixed overhead of $1,440,000 and an anticipated volume of 480,000 machine hours (40,000 per month). Jaycee is presently working at 85% of capacity, and the client needs the order in two months. Required: A. Is Jaycee's current operating environment one of excess capacity or no excess capacity? Briefly explain. B. If Jaycee had excess capacity, what would be the lowest cost total that the company should use when figuring its bid for the order? C. Can Jaycee produce this order in the required time frame of two months? Explain. D. Suppose that Jaycee is in marginal financial health. Explain the benefits and problems of approaching the bidding procedure with (1) a low bid or (2) a high bid.
Jaycee Manufacturing, which produces electrical components, is contemplating submitting a bid for 30,000 units of item no. 54. The bid's cost will be follows: $ 75,000 120,000 150,000 3,000 5,000 12,000 $365,000 Raw materials Direct labor Manufacturing overhead Additional set-up costs Special device Allocated administrative overhead Total cost The special device will be purchased for this job and once the job is completed, the device will be discarded. Jaycee applies total manufacturing overhead of $5 to each unit (0.5 machine hours at $10 per hour). This figure is based, in part, on budgeted yearly fixed overhead of $1,440,000 and an anticipated volume of 480,000 machine hours (40,000 per month). Jaycee is presently working at 85% of capacity, and the client needs the order in two months. Required: A. Is Jaycee's current operating environment one of excess capacity or no excess capacity? Briefly explain. B. If Jaycee had excess capacity, what would be the lowest cost total that the company should use when figuring its bid for the order? C. Can Jaycee produce this order in the required time frame of two months? Explain. D. Suppose that Jaycee is in marginal financial health. Explain the benefits and problems of approaching the bidding procedure with (1) a low bid or (2) a high bid.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Jaycee Manufacturing, which produces electrical components, is contemplating submitting a bid for
30,000 units of item no. 54. The bid's cost will be follows:
$ 75,000
120,000
150,000
3,000
5,000
12,000
$365,000
Raw materials
Direct labor
Manufacturing overhead
Additional set-up costs
Special device
Allocated administrative overhead
Total cost
The special device will be purchased for this job and once the job is completed, the device will be
discarded.
Jaycee applies total manufacturing overhead of $5 to each unit (0.5 machine hours at $10 per hour). This
figure is based, in part, on budgeted yearly fixed overhead of $1,440,000 and an anticipated volume of
480,000 machine hours (40,000 per month). Jaycee is presently working at 85% of capacity, and the
client needs the order in two months.
Required:
A. Is Jaycee's current operating environment one of excess capacity or no excess capacity? Briefly
explain.
B. If Jaycee had excess capacity, what would be the lowest cost total that the company should use when
figuring its bid for the order?
C. Can Jaycee produce this order in the required time frame of two months? Explain.
D. Suppose that Jaycee is in marginal financial health. Explain the benefits and problems of approaching
the bidding procedure with (1) a low bid or (2) a high bid.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education