Supply-chain effects on total relevant inventory cost. Peach Computer Co. outsources the pro- duction of motherboards for its computers. It is currently deciding which of two suppliers to use: Alpha or Beta. Due to differences in the product failure rates in the two companies, 5% of motherboards purchased from Alpha will be inspected and 25% of motherboards purchased from Beta will be inspected. The follow- ing data refer to costs associated with Alpha and Beta: Alpha Beta Number of orders per year 50 50 Annual motherboards demanded 10,000 $108 10,000 $105 Price per motherboard Ordering cost per order Inspection cost per unit Average inventory level Expected number of stockouts Stockout cost (cost of rush order) per stockout Units returned by customers for replacing $13 $10 $6 $6 100 units 100 units 100 300 $4 $6 50 500 motherboards Cost of replacing each motherboard Required annual return on investment Other carrying cost per unit per year $30 $30 10% 10% $3.50 $3.50

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Q: analysis? What are identified as possible risks associated with cost

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Q: Is corrective action always necessary when actual costs are higher than standard costs

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Q: What is lower of cost/market, and why is it used? Provide an example.

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Q: In a decision analysis situation, which one of the following costs is generally not relevant to the…

A: Relevant cost is the cost that is different between different alternatives. This cost is considered…

Q: n a decision analysis situation, which one of the following costs is generally not relevant to the…

A: Decision making is the process used to choose one of the various available alternatives. Examples of…

Q: What is interpretation of the usefulness of the contribution margin concept?

A: Contribution margin The additional profit gained for each unit sold is calculated by subtracting the…

Q: What are the two components that can affect the contribution margin? Why is it important to…

A: The two components that can affect contribution margin: 1) Number of units sold. 2) Price / cost per…

Q: What does the lower-of-cost-or-market (LCM) rule require?

A: Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting…

Q: role of the cost and its impact on profitability?

A: Costing is an important process that businesses use to determine the cost of producing goods and…

Q: Describe and apply the lower-of-cost-or-market rule.

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Q: Understand and apply the lower-of-cost-or-market rule.

A: Cost: It is the economic value incurred by an organization to produce a product or render a service.

Q: How should mixed costs be classified in cost, volume, and profit analysis?

A: Based on the cost behaviour costs are classified as fixed costs , variable costs and mixed costs.…

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.