Question- Fudge itd operates at three factory sites producing a closely related product range. The 20x4 budget for fudge Ita's operations is as follows: Croydon Luton Southen E000 1,000 Costs: E000 E000 Variable 475 2,200 1,300 Fixed (site) Fixed (central) 375 650 50 200 100 Sales 1,000 4,000 2,000 Profit 300 250 100 The lease of the Croydon site expires at the end of 20x4. Four alternative options have been identified for the 20XS operations: > Renew the Croydon site lease at an additional annual rental of E50,000, > Shut the Croydon site and franchise Croydon production to another manufacturer at a 1.5 per cent commission on sales. > Shut the croydon site and switch production to lutan; this would involve and additional E250,000 per year fixed costs at luton and additional transport costs on production transferred amounting to 7.5 per cent of sales. > Shut down the Croydon site and switch production to southend; this would involve additional fixed costs of c200,000 per year at southend and additional transport costs on production transferred amounting to 10 per cent of sales. Reguirements Evaluate the options and advise: Which option is most attractive on purely financial grounds;

Question- Fudge itd operates at three factory sites producing a closely related product range. The 20x4 budget for fudge Ita's operations is as follows: Croydon Luton Southen E000 1,000 Costs: E000 E000 Variable 475 2,200 1,300 Fixed (site) Fixed (central) 375 650 50 200 100 Sales 1,000 4,000 2,000 Profit 300 250 100 The lease of the Croydon site expires at the end of 20x4. Four alternative options have been identified for the 20XS operations: > Renew the Croydon site lease at an additional annual rental of E50,000, > Shut the Croydon site and franchise Croydon production to another manufacturer at a 1.5 per cent commission on sales. > Shut the croydon site and switch production to lutan; this would involve and additional E250,000 per year fixed costs at luton and additional transport costs on production transferred amounting to 7.5 per cent of sales. > Shut down the Croydon site and switch production to southend; this would involve additional fixed costs of c200,000 per year at southend and additional transport costs on production transferred amounting to 10 per cent of sales. Reguirements Evaluate the options and advise: Which option is most attractive on purely financial grounds;

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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Subject: AFAR #43
Return to question Lost Mine has offered to buy 3,100 of the US umbrellas at a price of $32 each. Mohave currently has the excess capacity necessary to accept the offer. The following information is related to the production of the US umbrella: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost $13.00 7.00 9.00 2.50 $31.50 $40.00 Regular. sales price Required: 1. Compute the incremental profit (or loss) from accepting the special order. 2. Should Mohave accept the special order? 3. Suppose that the special order had been to purchase 3,600 umbrellas får $28.00 each. Recompute the incremental profit (or loss) from accepting the special order under this scenario. 4. Assume that Mohave is operating at full capacity. Calculate the special-order price per unit at which Mohave would be indifferent between accepting or rejecting the special order. X Answer is complete but not entirely correct. Complete this question by entering your answers in…
Transfer pricingMogi Corp. manufactures one primary product, which is processed through two divisions (P and R). Costs for each division are: P R Variable cost per gallon $3 $15 Fixed cost per gallon* 2 12 * Based on production of 75,000 and 120,000 gallons for P and R respectively. P Division produces 75,000 gallons per month. R Division uses 120,000 gallons per month; of that, 75,000 gallons are purchased internally and 45,000 are purchased externally at $10 per gallon. After processing through R Division, a gallon of final product can be sold for $55.a. What would be P’s transfer price to R Division if the price is set at 180 percent of variable cost? $Answer b. What would be P’s transfer price to R Division if the price is set at 130 percent of full cost? $Answer c. What would be P’s transfer price to R Division if the price is set at market value? $Answer d. What is Mogi Corp.’s operating profit if all 120,000 gallon of final product can be sold for $55 per…
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Current Attempt in Progress A company contemplating the acceptance of a special order has the following unit costs based on 10000 units: Direct materials Direct labor Variable overhead Fixed overhead $4 O $(2800). O $6800. O $(6800). $2800. 13 8 5 A foreign company wants to purchase 1700 units at a special unit price of $29. The normal selling price per unit is $40. In addition, a special stamping machine will have to be purchased for $4000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is
Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market). Variable cost per unit $ 60 $ 44 Fixed costs per unit (based on capacity) Capacity in units $ 4 20,000 Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes. If the company's divisional managers are evaluated based their division's profits and Division A is currently selling 18,000 units on the outside market, what is Division A's lowest acceptable transfer price if it were to sell 4,000 units to Division B?
2. EOQ / Production / Discounts A machine company uses 3000 brackets during the course of a year. The brackets are bought from an external supplier at a price of 50 kr. each and will be received the same day as the order is placed. The average ordering cost is 187.50 kr. per order. The company uses an interest rate of 18% to account for the cost of capital, the cost of storage and handling is estimated to 4% and insurance to 3% of the value. You can assume that there are 250 working days in one year. a. Determine the economic order quantity for the brackets. b. Given the optimal order size from a, calculate the following: i Cycle time. i. Average inventory level. i. Annual inventory cost. iv. Annual ordering cost. The company is able to produce the brackets themselves at a rate of 60 per day. The fixed cost of setting up for production run is 600 kr. You can also assume that the variable cost of production is equal to the price when buying from an external supplier. c. What is the…
uod cz 1.The cost to produce one unit of the product is: Material $ 13.00 Labor $8.00 Variable cost $7.00 Fixed expenses $ 18.00 Total fixed expenses: $ 500,000 The company's normal capacity is 100,000 units. The figures given above are for 80,000 units. The company has received a special offer for 20,000 units for a price of $ 36 per unit from a foreign customer. Advice the manufacturer on whether the order should be accepted or not. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 3 (12pt) Qi:公 Arial vE - E T TTTT Paragraph v T T S T HTML CSS O fr Mashups
show solution for required a b c d give complete solution
Subject: AFAR #41