Specialty Metal Products, Inc. manufactures filters for use in custom over-the-range hoods. The costs per unit, for a batch of 10,000 filters, are as follows. Direct materials $10.00 Direct labor 8.00 Variable overhead 1.00 Fixed overhead 4.00 Total costs $23.00 Custom Kitchens has offered to sell 10,000 filters to Specialty Metal Products for $24 per filter. If Specialty Metal Products accepts Custom Kitchens' offer, the facilities used to manufacture filters could be used to produce BBQ grates. Revenues from the sale of BBQ grates are estimated at $25,000, with variable costs amounting to 80% of sales. In addition, $1 per unit of the fixed overhea associated with the manufacture of filters could be eliminated. Compute the following: Cost to make filters $ Cost to buy filters $ Should Specialty Metal Products accept Custom Kitchens' offer? OYes, the cost to purchase the filters is less than the cost to make them. ONo, the cost to purchase the filters is more than the cost to make them.

Specialty Metal Products, Inc. manufactures filters for use in custom over-the-range hoods. The costs per unit, for a batch of 10,000 filters, are as follows. Direct materials $10.00 Direct labor 8.00 Variable overhead 1.00 Fixed overhead 4.00 Total costs $23.00 Custom Kitchens has offered to sell 10,000 filters to Specialty Metal Products for $24 per filter. If Specialty Metal Products accepts Custom Kitchens' offer, the facilities used to manufacture filters could be used to produce BBQ grates. Revenues from the sale of BBQ grates are estimated at $25,000, with variable costs amounting to 80% of sales. In addition, $1 per unit of the fixed overhea associated with the manufacture of filters could be eliminated. Compute the following: Cost to make filters $ Cost to buy filters $ Should Specialty Metal Products accept Custom Kitchens' offer? OYes, the cost to purchase the filters is less than the cost to make them. ONo, the cost to purchase the filters is more than the cost to make them.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Economies of Scope refers to situations where per unit costs are:
If the fixed costs are USD 100 000 and the variable cost can be expressed as VC(Q)=5Q² NOK where Q is the quantity. What is the marginal cost of the quantity that produces the lowest average cost per unit?
Three production processes - A, B, and C - have the following cost structure: the selling price is 5.26 per unit Process Fixed Cost per Year Variable Cost per Unit A 119164 2.54 B 80631 4.52 C 70617 5.27 1. What is the cost of process A for a volume of 7104 units? (round to the nearest cent).
Smith Manufacturing is a major player in the lawn sprinkler business. Their high-end sprinkler is used commercially and is quite popular with golf course greens keepers. In producing these sprinklers Smith’s fixed cost (CF) is $50,000 per month with a variable cost (cv) of $10 per unit. The selling price for these high-end sprinklers is described by the equation p=$90 – 0.2(D). a) What is the optimal volume of sprinklers? b) Does Smith make a profit at that volume? Thank you.
HeatAll, manufacturer of radiant heaters (great for heating outdoor dining areas, a “hot” item these past few years!), finds that it costs them $160 to produce each heater. The company has total fixed costs of $5 million. If the company manufactures 250,000 units, what is the unit cost?
When the production starts, the value of Total fixed cost is 0 True/False
Holding costs are 35 MU/unit/year. The ordering cost is 120 MU/order, andsales are reletively constant at 400/month.a) What is the optimal order quantity?b) What is the annual total inventory cost? Please mention formulas and do it in detail so I can understand.
While drawing cost curves, the state of technology must be kept constant True/False
The information is as below: Month Units 1 1000 2 2000 3 3000 Calculate the minimum selling price per unit the company should charge to Break Even in month five (5) assuming production was increasing the same rate as the three months given. Variable cost per unit Total fixed costs Total costs K1,000,000 K1,200,000 K1,600,000 Fixed costs per unit Total variable costs
Classify the following costs into either being product cost or period cost:(a) Raw material costs(b) Income taxes paid(c) Interest expenses on borrowed funds(d) Wages incurred in producing products(e) Fire insurance premium paid on factory buildings(f) Electric bill for the warehouse operation(g) Salary paid for engineers(h) Material handling cost related to production(i) Salary paid for plant managerU) Leasing expense for forklift trucks in warehouse operation(k) Mortgage payments on factory buildings
If he wants the average cost of production to be $1, how many lures would he e) have to produce in one month? e)_ If he wants to make a profit of at least $4000 per month, what is the f) minimum number of lures he would have to produce if he sells every lure he produces for $4? f)_
A study of 86 savings and loan associations in six northwestern states yielded the following cost function. C� = 3.69 - 0.007999Q� + 0.000005359Q2�2 + 25.0X1�1 (3.69) (3.08) (3.42) (3.50) where C� = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q� = output; measured by total assets ($ million) X1�1 = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Holding constant the effects of bank branching (X1�1), what is the level of total assets that minimizes the average operating expense ratio? $746.31 million $1,562.70 million $1,492.63 million $461.31 million What is the average operating expense ratio for a savings and loan association with the level of total assets determined in the previous part and 1 branch?…