Selected Item Attempt Preview Make or Buy A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $55 per unit (100 bottles), including fixed costs of $12 per unit. A proposal is offered to purchase small bottles from an outside source for $36 per unit, plus $3 per unit for freight. Unit costs: a. Prepare a differential analysis dated January 25 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Differential Analysis Make Bottles (Alt. 1) or Buy Bottles (Alt. 2) January 25 Purchase price Freight Variable costs Fixed factory overhead Total unit costs Make Buy Bottles Bottles (Alternative 1) (Alternative 2) (Alternative 2) 0 0 > 133 X 31 X -164 X 99 X X 12 0 > 31 X -142 Differential Effects X -99 -12 X 133 0 < X X X 22 Preview In Window X Large Preview b. Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles. Buy the bottles

Selected Item Attempt Preview Make or Buy A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $55 per unit (100 bottles), including fixed costs of $12 per unit. A proposal is offered to purchase small bottles from an outside source for $36 per unit, plus $3 per unit for freight. Unit costs: a. Prepare a differential analysis dated January 25 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Differential Analysis Make Bottles (Alt. 1) or Buy Bottles (Alt. 2) January 25 Purchase price Freight Variable costs Fixed factory overhead Total unit costs Make Buy Bottles Bottles (Alternative 1) (Alternative 2) (Alternative 2) 0 0 > 133 X 31 X -164 X 99 X X 12 0 > 31 X -142 Differential Effects X -99 -12 X 133 0 < X X X 22 Preview In Window X Large Preview b. Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles. Buy the bottles

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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tudent question Time to preview question: 00 : 09 : 34 What should we price Fragrance at if we want to have a 45.6% margin. Account for unit cost, period expenses and overhead. The production cost is in the report. Ignore inventory carrying costs and assume period expenses and overhead is 50% of production cost. What should the price point be? Info given for Fragrance: Category Sales $28,413 Variable Costs Direct Material $11,755 Direct Labor $7,763 Inventory Carry $76 Total Variable Costs (Labor, Material, Carry) $19,594 Category Contribution Margin $8,819 Period Costs Depreciation $1,193 SG&A $0 R&D $970 Promotions $1,245 Sales $1,795 Administration $225 Total Period Costs $5,428 Net Margin $3,391 Current Price $38 Current Contribution Margin 31% Total units produced this year 748 Material cost per unit: $16.12 Labor cost per unit: 10.38 PRICING OPTIONS: 26.50 46.38 72.80 39.75 52.21 Please include all calculations
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Process or Sell Product P is produced for $31 per gallon. Product P can be sold without additional processing for $47 per gallon or processed further into Product Q at an additional cost of $7 per gallon. Product Q can be sold for $50 per gallon. Prepare a differential analysis dated February 26 on whether to Sell Product P (Alternative 1) or Process Further into Product Q (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Product P (Alt. 1) or Process Further into Product Q (Alt. 2) February 26 Process Further Sell Differential into Product Q Product P Effect (Alternative 2) (Alternative 1) (Alternative 2) Revenues, per unit $ Costs, per unit Profit (loss), per unit Should Product P be sold (Alternative 1) or processed further into Product Q (Alternative 2)?
Differential Analysis Report for Sales Promotion Proposal Rocket Shoe Company is planning a one-month campaiqn for August to promote sales of one of its two shoe products. A total of $176,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select f the campaign. Cross-Trainer Running Shoe Shoe Unit selling price $59 $65 Unit production costs: Direct materials $ (10) $(14) Direct labor (4) (5) Variable factory overhead (2) (4) Fixed factory overhead (6) (6) Total unit production costs $(22) $(29) Unit variable selling expenses (18) (17) Unit fixed selling expenses (10) (7) Total unit costs $(50) $(53) Operating income per unit $ 9 $ 12 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 28,000 additional units of cross-trainer shoes or 23,000 additional units of running shoes…
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