oration makes 42,000 tiny wheels to be used in the production of ts Beautiful Product. The average cost pertiny Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside manufacturer, called GreatWheel secently began producing a comparable try wheel that could be used in the Beautiful Product The price offered to wheel is $25.75 Mutiple Che $1,400 H Corporation decides not to make the wheels, there would be no other use for the production fecites and none of the fixed manufacturing overhead cost could be avoided. Drect laboris a variable cost in this company What would be the annual financial advantage idisadvantages for continung to make the wheels rather than duyg them from the outside supplert 179800 $10.10 $9.10 $3.75 $4.70 SH7000 at this level of activity is $275,500 oration to supply them with this teny

oration makes 42,000 tiny wheels to be used in the production of ts Beautiful Product. The average cost pertiny Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside manufacturer, called GreatWheel secently began producing a comparable try wheel that could be used in the Beautiful Product The price offered to wheel is $25.75 Mutiple Che $1,400 H Corporation decides not to make the wheels, there would be no other use for the production fecites and none of the fixed manufacturing overhead cost could be avoided. Drect laboris a variable cost in this company What would be the annual financial advantage idisadvantages for continung to make the wheels rather than duyg them from the outside supplert 179800 $10.10 $9.10 $3.75 $4.70 SH7000 at this level of activity is $275,500 oration to supply them with this teny

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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6.A Company produces Optimist sailboats. The costs of producing 107000 tiller extensions for use in the boats are as follows: 2/3 Direct labor $2530 00 Direct materials 30200 Variable ove Fixed overhead 18500 An outside supplier has offered to supply the tiller extensions for $725000. If the company accepts the offer $86000 of fixed costs can be avoided. What is the financial advantage (disadvantage) of accepting the supplier's offer?
Vaughn Music produces 60800 blank CDs on which to record music. The CDs have the following costs Direct Materials $10600 Direct Labour 14800 Variable Overhead 2800 Fixed Overhead 6800 None of Vaughni's foxed overhead costs can be reduced, but another product could be made that would increase the operating income by $4400 if the CDs were acquired externally If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Vaughn would be willing to accept to acquire the 60800 units externally
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The Rosa model of Mohave Corporation is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohave's two options follows: Estimated demand Estimated sales price Estimated manufacturing cost per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit manufacturing cost Additional development cost Rosa Umbrella 29,000 units $31.00 $ 21.50 4.50 3.50 6.00 $ 35.50 Decorated Umbrella 29,000 units $ 41.00 $ 23.50 7.00 5.50 6.00 $ 42.00 $ 12,000 Required: 1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations. 2. Should Mohave add decorations to the Rosa umbrella? 3-a.Suppose the higher price of the decorated umbrella is expected to reduce estimated demand for this product to 27,000 units.…
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A 0 OLN3+ 1 2 4 $48,000 11,600 11,600 11,600 + replace Machine A Machine B These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) Machine B $58,000 11,200 11, 200 11,200 11,200 + replace Annual Rental Payment
Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals $38, 400. Parker's accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Vases Figurines Price $40 $70 Variable cost 30 42 Contribution margin $10 $28 Number of units 1,000 500 Required: If required, round your final answers to nearest whole value. 1. Compute the number of vases and the number of figurines that must be sold for the company to break even. Break - even vases fill in the blank 1 units Break - even figurines fill in the blank 2 units 2. Parker Pottery is considering upgrading its factory to improve the quality of its products. The upgrade will add $5, 280 per year to total fixed cost. If the upgrade is successful, the projected sales of vases will be 2,000, and figurine sales will increase to 1,000 units. What is the new break -…
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A3
Wing Sporting Goods (WSG) is a small company that makes two models of a metal baseball bat-Sport and Collegiate. Both models are produced on a single machine. The price and costs of the two models are Price per unit Variable cost per unit Machine minutes per unit The one machine that is used to produce both models has a capacity of 32,100 machine-minutes per quarter. Fixed manufacturing costs per quarter are $395,000. Sport $ 235 $88 6 Required: a. Suppose that the maximum unit sales in a quarter that WSG can achieve is 6,000 units of each product. How many units of each model should WSG produce in a quarter? b. Suppose that the maximum unit sales in a quarter that WSG can achieve is 4,200 units of each product. How many units of each model should WSG produce in a quarter? Required A Required B Collegiate $ 420 $ 168 15 Complete this question by entering your answers in the tabs below. Sport Model Collegiate Model Suppose that the maximum unit sales in a quarter that WSG can achieve is…
Dewey Manufacturing has been approached by a new customer with an offer to purchase 500 units of its hands-free automotive model SMAK at a price of $15,000 per unit. Existing sales would not be affected, and Dewey has sufficient capacity to produce the special order. Fixed overhead will not change if Dewey accepts the order or not. Unit cost data is: Per Unit: Direct Materials $6,000 Direct Labor $2,500 Variable OVHD $3,500 Fixed OVHD $10,000 $22,000 Normal sales price is $27,000. Assume Dewey decides to accept the order. How much will their operating income change? Should they have accepted the order
Blue Spruce Tech produces 60,000 iPhone adapters with the following costs:
Futura Company purchases 75,000 starters from a supplier at $11.10 per unit that it installs in farm tractors. Due to a reduction in output, the company now has enough idle capacity to produce the starters rather than buying them from the supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $12.20, as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit $ 5.00 3.00 1.80 1.46 2.66 2.40 $ 12. 26 Total $ 135,000 $ 185,000 $ 30,000 If Futura decides to make the starters, a supervisor would be hired (at a salary of $135,000) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $83.000 per period. Required: What is the financial advantage (disadvantage) of making the…