Maverick Inc. Is deciding on which suppller to choose for one of Its components, Suppliers have similar quallty but varying costs when It comes to ordering costs, commissions, and variable costs per unit. Maverlck Is equally Wikely to order 1000, 1200, 1400, or 1600 components this year. Orders come in a size of 100 components per order, so there will be multiple orders each year. Commissions are charged on the total purchase cost (i.e., order cost + varlable costs). Maverick has narrowed the choices to four possible suppliers with the following cost information: Cost per order $100.0 $125.0 $T10.0 $105.0 elow is an incomplete payoff table: Cost per unitCommissions $10.00 $9.00 $7.00 $8.00 Witmore Ltd. 2.0% 2.0% 3.0% 2.5% Locke Ltd. Shepherd Ltd. Bushel Inc. Units Ordered 1,400 D. 1,000 1,200 1,800 upplier $13.464.00 $17,952 00 Witmore Ltd. Locke Ltd. $10,455.00 $14,637.00 S10.011 60 $11 680 20

Maverick Inc. Is deciding on which suppller to choose for one of Its components, Suppliers have similar quallty but varying costs when It comes to ordering costs, commissions, and variable costs per unit. Maverlck Is equally Wikely to order 1000, 1200, 1400, or 1600 components this year. Orders come in a size of 100 components per order, so there will be multiple orders each year. Commissions are charged on the total purchase cost (i.e., order cost + varlable costs). Maverick has narrowed the choices to four possible suppliers with the following cost information: Cost per order $100.0 $125.0 $T10.0 $105.0 elow is an incomplete payoff table: Cost per unitCommissions $10.00 $9.00 $7.00 $8.00 Witmore Ltd. 2.0% 2.0% 3.0% 2.5% Locke Ltd. Shepherd Ltd. Bushel Inc. Units Ordered 1,400 D. 1,000 1,200 1,800 upplier $13.464.00 $17,952 00 Witmore Ltd. Locke Ltd. $10,455.00 $14,637.00 S10.011 60 $11 680 20

Name: Maverick Inc, Is deciding on which supplier to choose for one of Its
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Maverick Inc, Is deciding on which supplier to choose for one of Its components,Suppliers have similar quallty but varying costs when It comes to ordering costs,commissions, and variable costs per unit. Maverick is equally Wikely to order 1000,1200,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Novak Inc. makes unfinished bookcases that it sells for $60. Production costs are $38 variable and $10 fixed. Because it has unused capacity, Novak is considering finishing the bookcases and selling them for $72. Variable finishing costs are expected to be $9 per unit with no increase in fixed costs. Prepare an analysis on a per-unit basis that shows whether Novak should sell unfinished or finished bookcases. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Net Income Sell Process Further Increase (Decrease) $ $ $ Sales per unit Variable cost per unit Fixed cost per unit Total per unit cost $ Net income per unit The bookcases processed further. $ $
Southfield Division offers its product to outside markets for $134. It incurs variable costs of $59 per unit and fixed costs of $148,500 per month based on monthly production of 23,900 units. Northfield Division can acquire the product from an alternate supplier for $139 per unit or from Southwest Division for a transfer price of $134 plus $6 per unit in transportation costs. Required: a. What are the costs and benefits of the alternatives available to Southfield Division and Northfield Division with respect to the transfer of Southfield Division's product? Assume that Southfield Division can market all that it can produce. b. How would your answer change if Southfield Division had idle capacity sufficient to cover all of Northfield Division's needs? a. Net benefit b. Net benefit per unit per unit
It costs Ghala Company OMR 13 of variable and OMR 6 of fixed costs to produce one unit which normally sells for OMR 35. Al Hadid Co. offers to purchase 3,000 units at OMR 15 each. Ghala Co. would incur shipping costs of OMR 1 per unit if the order were accepted. Ghala Co. has sufficient unused capacity to produce the 3,000 units. If the special order is accepted, what will be the effect on net income? Select one: a. OMR 6,000 increase O b. OMR 3,000 increase C. OMR 45,000 increase d. None of the answers are correct e. OMR 9,000 decrease
The Chimes Clock Company sells a particular clock for $40. The variable costs are $23 per clock and the breakeven point is 230 clocks. The company expects to sell 280 clocks this year. If the company actually sells 430 clocks, what effect would the sale of additional 150 clocks have on operating income? Explain your answer. The sale of an additional 150 clocks would operating income by the amount of The total effect would amount to
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $13. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the cost-based transfer price? Variable cost per unit $6.31 Fixed cost per unit 1.36 Division B sales price of Component X 14.5
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the cost-based transfer price? Variable cost per unit $7.48 • Fixed cost per unit 1.97 • Division B sales price of Component X 14.50
Green Co. incurses cost of $15 per pound to produce Product X, which it sells for $26 per pound. The company can further process Product X to produce Product Y. Product Y would sell for $30 per pound and would require an additional cost of $10 per pound to be produced. The differential cost of producing Product Y is _____.
Management of the Crane Company would like the Food Division to transfer 11000 cans of its final product to the Restaurant Division for $40. The Food Division sells the product to customers for $80 per unit. The Food Division’s variable cost per unit is $43 and its fixed cost per unit is $9.If the Food Division has 11000 units available capacity, what is the minimum transfer price the Food Division should accept?
Concord, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $13, while the cost of assembling each unit is estimated at $15. Unassembled units can be sold for $54, while assembled units could be sold for $60 per unit. What decision should Concord make? O Sell before assembly; the company will save $9 per unit. Process further; the company will save $9 per unit. O Process further; the company will save $6 per unit. O Sell before assembly; the company will save $4 per unit.
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $14. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost plus assuming 15% transfer price? Variable cost per unit $7.16 Fixed cost per unit 1.14 Division B sales price of Component X 14.5
Dake Bakery is purchasing heavy cream from an outside suppliers. The comapny's dairy division, which has no excess capacity, makes and sells heavy cream at a variable cost of $32 per gallon and a selling price of $59 per gallon. If the dairy division begins sales to the bakery, it willl use the general transfer pricing rule and will be able to reduce vvariable cost on internal transfer by $5 per gallon. How much is the minimum transfer price per gallon that the dairy division should establish?
General guideline, transfer pricing. The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity,incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a priceof $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income.1. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD?2. What is the maximum transfer price at which the AD manager would be willing to purchase screens from the SD?3. Now suppose that the SD can sell only 70% of its output capacity of 20,000…