Pubworld is a textbook publishing company that has contracts with several different authors. It also operates a printing operation called Printpro. Both companies operate as separate profit centers. Printpro prints textbooks written by Pubworld authors, as well as books written by non-Pubworld authors. The printing operation bills out at $0.06 per page and a typical textbook requires 600 pages of print. A developmental editor from Pubworld approached the printing operation manager offering to pay $0.045 per page for 5,000 copies of a 600-page textbook. Outside printers are currently charging $0.05 per page. Printpro's variable cost per page is $0.04.

Pubworld is a textbook publishing company that has contracts with several different authors. It also operates a printing operation called Printpro. Both companies operate as separate profit centers. Printpro prints textbooks written by Pubworld authors, as well as books written by non-Pubworld authors. The printing operation bills out at $0.06 per page and a typical textbook requires 600 pages of print. A developmental editor from Pubworld approached the printing operation manager offering to pay $0.045 per page for 5,000 copies of a 600-page textbook. Outside printers are currently charging $0.05 per page. Printpro's variable cost per page is $0.04.

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

Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment systen. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,750 and sells the remote separately for $100, and offers the entire package for $1,900. VP does not sell the installation service separately. VP is aware that other similar vendors charge $150 for the installation service. VP also estimates that it incurs approximately $100 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales. Required: 1. to 3. Calculate the stand-alone selling price of the installation service using each of the following approaches. Stand-Alone Selling Price Adjusted market…
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…
Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. Anational sporting goods chain recently submitted a special order for 4,000 pairs of weight-liftinggloves. Feinan Sports was not operating at capacity and could use the extra business.Unfortunately, the order’s offering price of $12.70 per pair was below the cost to produce them.The controller was opposed to taking a loss on the deal. However, the personnel manager arguedin favor of accepting the order even though a loss would be incurred; it would avoid the problemof layoffs and would help maintain the community image of the company. The full cost toproduce a pair of weight-lifting gloves is presented below.Direct materials $ 7.40Direct labor 3.80Variable overhead 1.60Fixed overhead 3.10 Total $15.90No variable selling or administrative expenses would be associated with the order. Non-unitlevel activity costs are a small percentage of total costs and are therefore not considered.Required:1. Assume…
Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,810, sells the remote separately for $130, and offers the entire package for $2,020. VP does not sell the installation service separately. VP is aware that other similar vendors charge $180 for the installation service. VP also estimates that it incurs approximately $130 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales. Required: 1. to 3. Estimate the stand-alone selling price of the installation service using each of the following approaches. Adjusted market assessment Expected cost plus…
Davenport Corp. sells William's Furnishings Co., $60,000 worth of couches, chairs, and lounges for William's Furnishings Co. ("WF") to sell to its customers. When Davenport Corp's trucks attempt to deliver the merchandise, they are advised by representatives from WF that they can no longer afford to pay Davenport Corp. for the order. At the time of delivery, the market value of the merchandise is $40,000. What, if anything, can Davenport sue WF to recover? $20,000 O S60,000 O $40,000
Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer’s home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,750 and sells the remote separately for $100, and offers the entire package for $1,900. VP does not sell the installation service separately. VP is aware that other similar vendors charge $150 for the installation service. VP also estimates that it incurs approximately $100 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales. Required: 1. to 3. Calculate the stand-alone selling price of the installation service using each of the following approaches. 1. Adjusted Market Assessment = 2. Expected…
Bria Furniture sells bed frames and mattresses. One of its products is a premium therapeutic bed set produced by OmniSleep, which comes with a mattress and a bed frame. Bria offers a package consisting of the mattress, the frame, and on-site installation by its staff. All of these components can be sold separately, as often done by other vendors, so Bria concludes that these are separate performance obligations. Bria sells the OmniSleep package for $3,000. The mattress and the frame are sold separately for $2,000 and $900, respectively. Other vendors in the same area typically charge $200 for on-site installation. Bria does not sell on-site installation separately. On average, the prices charged by Bria are 10% higher than those of its competitors. Bria estimates that it incurs about $100 of compensation and other costs to provide the installation service. The profit margin over cost is estimated to be approximately 35%. Required: (a) Estimate the stand-alone selling price of the…
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $124,960. The seller agreed to allow a 5.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,820. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $870. The loader operator is paid an annual salary of $15,500. The cost of the.company's theft insurance policy increased by $2,320 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $7,600. Required Determine the amount to be capitalized in the asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs
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 $ 192 40 30% Bacon Hessel Hessel 3,000 $ 208 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. The Accounting Department recorded $265,200 as the cost of late deliveries to customers. Effective Cost Per Carton Total 8,000 $ 198 20 15% Required: Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the…
Stuart Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail, Inc. Never-Fail is a multimillion-dollar company started by Wes Never immediately after he failed to finish his first accounting course. The company's motto is "We Never-Fail to Deliver Your Package on Time." When Never-Fail has more freight than it can deliver, it pays Stuart to carry the excess. Stuart contracts with independent pilots to fly its planes on a per-trip basis. Stuart recently purchased an airplane that cost the company $6,192,000. The plane has an estimated useful life of 25,800,000 miles and a zero salvage value. During the first week in January, Stuart flew two trips. The first trip was a round trip flight from Chicago to San Francisco, for which Stuart paid $350 for the pilot and $300 for fuel. The second flight was a round trip from Chicago to New York. For this trip, it paid $300 for the pilot and $150 for fuel. The round trip between…
Thornton Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fall, Incorporated. Never-Fall is a multimillion-dollar company started by Wes Never Immediately after he falled to finish his first accounting course. The company's motto is "We Never-Fall to Deliver Your Package on Time." When Never-Fall has more freight than It can deliver, It pays Thornton to carry the excess. Thornton contracts with Independent pilots to fly its planes on a per-trip basis. Thornton recently purchased an airplane that cost the company $5,588,000. The plane has an estimated useful life of 25,400,000 miles and a zero salvage value. During the first week In January, Thornton flew two trips. The first trip was a round trip flight from Chicago to San Francisco, for which Thornton pald $370 for the pilot and $320 for fuel. The second flight was a round trip from Chicago to New York. For this trip, It paid $320 for the pilot and $160 for fuel. The…
Markson and Sons leases a copy machine with terms that include a fixed fee each month of $400 plus a charge for each copy made. The company uses the high-low method to analyze costs. If Markson paid $580 for 5,000 copies and $400 for 3,000 copies, how much would Markson pay if it made 8,400 copies? Total cost $ 886 X Feedback V Check My Work For the two listed amounts, find the difference between the highest and lowest amounts each to apply the high low method. The differences between the two highest and lowest amounts from both columns are used to calculate the variable cost per unit using the method. Once that amount is determined, the total costs is made up of the total fixed and variable costs. Apply the variable cost per unit times the number of copies and add in the fixed costs to determine the required amount.