Tupper Inc. and Victory Inc. are two small clothing companies that are considering leasing a dyeing machine together. The companiesestimated that in order to meet production, Tupper needs the machine for 950 hours and Victory needs it for 700 hours. If eachcompany rents the machine on its own, the fee will be $85 per hour of usage. If they rent the machine together, the fee will decreaseto $80 per hour of usage.Read the requirements.Requirements1.Calculate Tupper's and Victory's respective share of fees under the stand-alone cost-allocation method.2. Calculate Tupper's and Victory's respective share of fees using the incremental cost-allocation methodassuming (a) Tupper ranked as the primary party and (b) Victory ranked as the primary party.3. Calculate Tupper's and Victory's respective share of fees using the Shapley value method.4. Which method would you recommend Tupper and Victory use to share the fees?-X

Standalone Method :— In this method, Common cost is allocated between the performance obligations on…

Answered: Tupper Inc. and Victory Inc. are two…

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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The Arthur Company manufactures kitchen utensils. The company is currently producing well below its full capacity. The Benton Company has approached Arthur with an offer to buy 17,000 utensils at $0.85 each. Arthur sells its utensils wholesale for $0.96 each; the average cost per unit is $0.91, of which $0.10 is fixed costs. If Arthur were to accept Benton's offer, what would be the increase in Arthur's operating profits? Multiple Choice O O $850. $1,020. $680. $1,870.
Common costs. Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000.
Lamphere Lawn Care provides lawn and gardening services. The price of the service is fixed at a flat rate for each service, and most costs of providing the service are the same, given the similarity in the lawns and lots. The owner budgets income by estimating two factors that fluctuate with the economy: the contribution margin associated with each service call and the number of customers who will request lawn service. Looking at next year, the owner develops the following estimates of contribution margin (price less variable cost of the service, including labor) and the estimated number of service calls. Although the owner understands that it is not strictly true, the owner assumes that the cost of fuel and the number of customers are independent. Contribution Margin per Service Call (Price - Scenario Excellent Fair Poor Excellent Fair Poor Excellent In addition to the variable costs of service, the owner estimates that other costs are $49,000 plus $8 for each service call in excess…
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A salesperson who sells commercial machinery to assembly companies that require large machines to make their car parts that they sell to automotive companies is talking to manufacturing company representatives who are interest in purchasing 5 large assembly machines. The machines sell for $10,000 each and are necessary for companies that make parts. The salesperson, Sam, tells the manufacturing company managers that the machines have a new high-speed motor that can make parts in half the time. The management of American Manufacturing Company (AMC) feels this is very important and would help cut down on costs at the company. The management agrees to purchase 5 high-speed machines for a total of $50,000. Önce the machines are delivered, the management realizes that the machines do not produce double the parts, and do not have the high-speed motors as the salesperson stated. What are the best legal arguments that the management can make to challenge the purchase agreement on the 5…
a) Using incremental analysis, determine if the component should be purchased from the outside supplier? Would your decision in part a) change if the company has the opportunity to rent out its facilities that it currently uses to manufacture the component for $5,500 ? Show full computations Why “Opportunity Costs” are not recorded in the financial books but are considered a relevant cost.
Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding. Coram has manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local outfitter that manufactures and sells backpacks, tent cases, and so on, contacted Coram and proposed that they produce the headphone travel cases. Based on management experience, Coram's cost per travel case is as follows (based on annual production of 40,000 units). Direct materials Direct labor Variable overhead Fixed overhead Total HTG has offered to sell the case to Coram for $39 each. The total order would amount to 40,000 travel cases per year. Coram's management decides that they will make the switch to HTG cases if Coram can save at least $12,000 per year. Accepting the offer would eliminate annual fixed overhead of $76,000. Required: a. Prepare a schedule that shows the total differential costs. b. Should Coram continue to make the travel cases or buy them from HTG? $ 10.00 21.20…
What is Adam’s current level of fixed costs? (Use the rounded contribution margin per unit calculated in the previous part.) Current level of fixed costs $_____________ AdamGranger operates a kiosk in downtown Chicago, at which he sells one style of baseball hat. He buys the hats from a supplier for $14 and sells them for $20. Adam’s current breakeven point is 15,000 hats per year. What is Adam’s current level of fixed costs? (Use the rounded contribution margin per unit calculated in the previous part. contribution margin per unit IS $6.00
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Snow Now sells snowboards. Snow Now knows that the most people will pay for the snowboards is $129.99. Snow Now is convinced that it needs a 45% markup based on cost. The most that Snow Now can pay to its supplier for the snowboards is: A. $88.65 B. $98.65 C. $96.65 D. None of these E. $87.65
3

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