Radom Manufacturing produces various products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to five tons of trash in a load. The landfill operation requires certain preparation activities regardless of the amount of trash in a truck (i.e., for each load). The budget for the landfill for next year follows: Volume of trash Preparation costs (varies by loads) Other variable costs (varies by tons) Fixed costs Total budgeted costs 2,450 tons (490 loads) $ 166,600 166,600 245,000 $ 578,200 Radom plans to make the landfill a profit center and charge the manufacturing plants for disposal of the trash. The landfill has sufficient capacity to operate for at least the next 20 years. Other landfills are available in the area (both private and municipal), and both Radom manufacturing plants would be free to decide which landfill to use. Required: a. Compute the optimal transfer price. b. Compute the total variable costs for a three-ton load of trash from one of the plants.

Radom Manufacturing produces various products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to five tons of trash in a load. The landfill operation requires certain preparation activities regardless of the amount of trash in a truck (i.e., for each load). The budget for the landfill for next year follows: Volume of trash Preparation costs (varies by loads) Other variable costs (varies by tons) Fixed costs Total budgeted costs 2,450 tons (490 loads) $ 166,600 166,600 245,000 $ 578,200 Radom plans to make the landfill a profit center and charge the manufacturing plants for disposal of the trash. The landfill has sufficient capacity to operate for at least the next 20 years. Other landfills are available in the area (both private and municipal), and both Radom manufacturing plants would be free to decide which landfill to use. Required: a. Compute the optimal transfer price. b. Compute the total variable costs for a three-ton load of trash from one of the plants.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 31P: Haysbert Company provides management services for apartments and rental units. In general, Haysbert...

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Radom Manufacturing produces various products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to five tons of trash in a load. The landfill operation requires certain preparation activities regardless of the amount of trash in a truck (i.e., for each load). The budget for the landfill for next year follows: Volume of trash 2,450 tons (490 loads) Preparation costs (varies by loads) $ 166,600 Other variable costs (varies by tons) 166,600 Fixed costs 245,000 Total budgeted costs $ 578,200 Radom plans to make the landfill a profit center and charge the manufacturing plants for disposal of the trash. The landfill has sufficient capacity to operate for at least the next 20 years. Other landfills are available in the area (both private and municipal), and both Radom manufacturing plants would be free to decide which landfill to use. Required: Compute…
Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to four tons of trash In a load. The landfill operation requires certain preparation activities regardless of the amount of trash in a truck (Le., for each load). The budget for the landfill for next year follows. volume of trash Preparation costs (varies by loads) other variable costs (varies by tons) Fixed costs 1,200 tons (300 loads) $ 54,000 54,000 178,000 $286, 000 Total budgeted costs Mathes is considering making the landfill a profit center and charging the manufacturing plants for disposal of the trash. The landfill has sufficlent capacity to operate for at least the next 20 years. Other landfills are available in the area (both private and municipal), and each plant would be free to declde which landfill to use. Required: a. Compute the optimal transfer…
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Haysbert Company provides management services for apartments and rental units. In general, Haysbert packages its services into two groups: basic and complete. The basic package includes advertising vacant units, showing potential renters through them, and collecting monthly rent and remitting it to the owner. The complete package adds maintenance of units and bookkeeping to the basic package. Packages are priced on a per-rental unit basis. Actual results from last year are as follows: Haysbert had budgeted the following amounts: Required: 1. Calculate the contribution margin variance. 2. Calculate the contribution margin volume variance. 3. Calculate the sales mix variance.
Can you help me prepare the budgeted income statement for the next year?
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The Gourmand Cooking School runs short cooking courses at its small campus. Management has Identified two cost drivers it uses in Its budgeting and performance reports-the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 50 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Courses Students Revenue For example, administrative expenses should be $3,270 per month plus $15 per course plus $4 per student. The company's sales should average $800 per student. Expenses: The company planned to run three courses with a total of 45 students; however, it actually ran three courses with a total of only 42 students. The actual operating results for September were as follows: Instructor…
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