Quality improvement. Dover Corporation makes printed cloth in two departments: weaving and printing. Currently, all product first moves through the weaving department and then through the printing department before it is sold to retail distributors for $2,800 per roll. Dover provides the following information: Weaving 20,000 rolls Printing 30,000 rolls Monthly capacity Monthly production Direct material cost per roll of cloth processed at each operation Fixed operating costs 19,000 rolls 17,100 rolls $300 $1,200 $11,400,000 $1,710,000 Dover can start only 20,000 rolls of cloth in the weaving department because of capacity constraints of the weaving machines. Of the 20,000 rolls of cloth started in the weaving department, 1,000 (5%) defective rolls are scrapped at zero net disposal value. The good rolls from the weaving department (called gray cloth) are sent to the printing department. Of the 19,000 good rolls started at the printing operation, 1,900 (10%) defec- tive rolls are scrapped at zero net disposal value. The Dover Corporation's total monthly sales of printed cloth equal the printing department's output.
Quality improvement. Dover Corporation makes printed cloth in two departments: weaving and printing. Currently, all product first moves through the weaving department and then through the printing department before it is sold to retail distributors for $2,800 per roll. Dover provides the following information: Weaving 20,000 rolls Printing 30,000 rolls Monthly capacity Monthly production Direct material cost per roll of cloth processed at each operation Fixed operating costs 19,000 rolls 17,100 rolls $300 $1,200 $11,400,000 $1,710,000 Dover can start only 20,000 rolls of cloth in the weaving department because of capacity constraints of the weaving machines. Of the 20,000 rolls of cloth started in the weaving department, 1,000 (5%) defective rolls are scrapped at zero net disposal value. The good rolls from the weaving department (called gray cloth) are sent to the printing department. Of the 19,000 good rolls started at the printing operation, 1,900 (10%) defec- tive rolls are scrapped at zero net disposal value. The Dover Corporation's total monthly sales of printed cloth equal the printing department's output.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The printing department is considering buying 10,000 additional rolls of gray cloth from an outside supplier at $2,000 per roll, which is much higher than Dover’s cost of weaving the roll. The printing department expects that 10% of the rolls obtained from the outside supplier will result in defective products. Should the printing department buy the gray cloth from the outside supplier? Show your calculations.
![Quality improvement. Dover Corporation makes printed cloth in two departments: weaving and
printing. Currently, all product first moves through the weaving department and then through the printing
department before it is sold to retail distributors for $2,800 per roll. Dover provides the following information:
Weaving
20,000 rolls
Printing
30,000 rolls
Monthly capacity
Monthly production
Direct material cost per roll of cloth processed at each operation
Fixed operating costs
19,000 rolls
17,100 rolls
$300
$1,200
$11,400,000
$1,710,000
Dover can start only 20,000 rolls of cloth in the weaving department because of capacity constraints of the
weaving machines. Of the 20,000 rolls of cloth started in the weaving department, 1,000 (5%) defective rolls
are scrapped at zero net disposal value. The good rolls from the weaving department (called gray cloth) are
sent to the printing department. Of the 19,000 good rolls started at the printing operation, 1,900 (10%) defec-
tive rolls are scrapped at zero net disposal value. The Dover Corporation's total monthly sales of printed cloth
equal the printing department's output.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6c0313d6-1021-4cbc-a6f0-cfe85974a9fd%2F416cf92e-8732-45cd-968a-62066d540961%2Fx9q4bv.jpeg&w=3840&q=75)
Transcribed Image Text:Quality improvement. Dover Corporation makes printed cloth in two departments: weaving and
printing. Currently, all product first moves through the weaving department and then through the printing
department before it is sold to retail distributors for $2,800 per roll. Dover provides the following information:
Weaving
20,000 rolls
Printing
30,000 rolls
Monthly capacity
Monthly production
Direct material cost per roll of cloth processed at each operation
Fixed operating costs
19,000 rolls
17,100 rolls
$300
$1,200
$11,400,000
$1,710,000
Dover can start only 20,000 rolls of cloth in the weaving department because of capacity constraints of the
weaving machines. Of the 20,000 rolls of cloth started in the weaving department, 1,000 (5%) defective rolls
are scrapped at zero net disposal value. The good rolls from the weaving department (called gray cloth) are
sent to the printing department. Of the 19,000 good rolls started at the printing operation, 1,900 (10%) defec-
tive rolls are scrapped at zero net disposal value. The Dover Corporation's total monthly sales of printed cloth
equal the printing department's output.
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