The Cell Phone Department has been purchasing the chips that it needs for $3.50 per chip from CompuParts, but the manager was thinking that if the Chips Department could supply the chips for less than what CompuParts is asking, then it would arrange a ransfer between departments instead of giving the business to an external company. Requirements Requirement 1. Should the Chips Department supply the chips to the Cell Phone Department under these circumstances? Before answering this question, we must first determine the minimum transfer price. The minimum transfer price is $ The internal transfer take place. Requirement 2. If the Chips Department had sufficient capacity, would this make a difference? (Round your answer to the nearest cent.) The minimum transfer price, if the Chips Department had capacity, is $ than the maximum transfer price of $3.50 per unit. Therefore, the internal transfer This is take place. i Data Table Variable manufacturing costs Variable selling and administrative costs Capacity.... Current production Print Done S $ 3.00 1.60 600,000 units 600,000 units X

The Cell Phone Department has been purchasing the chips that it needs for $3.50 per chip from CompuParts, but the manager was thinking that if the Chips Department could supply the chips for less than what CompuParts is asking, then it would arrange a ransfer between departments instead of giving the business to an external company. Requirements Requirement 1. Should the Chips Department supply the chips to the Cell Phone Department under these circumstances? Before answering this question, we must first determine the minimum transfer price. The minimum transfer price is $ The internal transfer take place. Requirement 2. If the Chips Department had sufficient capacity, would this make a difference? (Round your answer to the nearest cent.) The minimum transfer price, if the Chips Department had capacity, is $ than the maximum transfer price of $3.50 per unit. Therefore, the internal transfer This is take place. i Data Table Variable manufacturing costs Variable selling and administrative costs Capacity.... Current production Print Done S $ 3.00 1.60 600,000 units 600,000 units X

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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Qd.1.
Blossom makes swimsuits and sells them directly to retailers. Although Blossom has a variety of suits, it does not make the all-body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. It says the all- body suit would sell for approximately $118. Given its experience, Blossom believes the all- body suit would have the following manufacturing costs: Direct materials Direct labour Manufacturing overhead Total costs (a1) $26 30 48 $104 Assume that Blossom uses cost-plus pricing, and sets the price 25% above the product's costs. (Round answer to 2 decimal places, e.g. 15.25.) What would be the price charged for the all-body swimsuit?
Windu Enterprises uses a manufacturing process that is very labor intensive to manufacture its multicolored laser vegetable slicers. Windu is considering a change to a more automated manufacturing process. The cost structure information for Windu's options are listed below. Windu sells its only product for $25 per unit. Costs Fixed Manufacturing Costs Variable Manufacturing Cost per unit Current Method $180,000 $15 Automated Method $240,000 $13 Required. 1. Compute the breakeven points for both production methods 2. Compute the point of indifference for these two production methods (i.e. at what number of units of production will income be equal for both methods?) 3. Calculate the Operating Leverage Factor for both methods at the point of indifference + 4. If Windu's management intends to produce and sell 35,000 units, which production method should they use? 5. By how much per unit (nearest $.01) would the current method's variable cost need to decrease in order for management to be…
Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's products appears below: Selling price per unit Variable cost per unit Upholstery labor-hours per unit Recliner $ 1,128 $ 750 Required 1 Required 2 7 hours Required 3 Complete this question by entering your answers in the tabs below. Sofa $ 1,750 $ 1,200 10 hours Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth…
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A 0 1 2 3 4 $46,000 11, 200 11,200 11,200 replace Machine A Machine B Machine B $56,000 These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 8% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) $ 29,029.46 x $ 27,318.43 x 10,400 10,400 > Answer is complete but not entirely correct. Annual Rental Payment 10,400 10,400 replace O Machine A Machine B b. Which machine should Borstal buy? c. If there is steady 4% per year inflation, what will be the annual rental payment for machine B for the second year? (Enter your answer as a…
Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's products appears below: Recliner Sofa Love Seat Selling price per unit $ 1,158 $ 1,950 $ 1,400 Variable cost per unit $ 750 $ 1,300 $ 1,000 Upholstery labor-hours per unit 6 hours 13 hours 5 hours Required: Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming this extra time would be used to produce sofas, up to how much of an overtime rate per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $45 per hour. The management of…
Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's products appears below: Recliner Sofa Love Seat Selling price per unit $ 1,050 Variable cost per unit Upholstery labor-hours per unit $ 750 $ 2,090 $ 1,250 $ 1,500 $ 1,100 6 hours 14 hours 5 hours Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $57 per hour. The management of Portsmouth is…
A junk yard pulls parts off of wrecked vehicles and sells them to a wholesaler. If its total revenue function is TR = 28z and the total cost function is TC 168 +20z. The number of parts that the junk yard must sell to breakeven is S parts.
Industrial Robots does not manufacture its own motors or computer chips. Its premium product differs from its standard product in having heavier-duty motors and more computer chips for greater flexibility. As a result, Industrial Robots manufactures a higher fraction of the standard product’s value itself, and it purchases a higher fraction of the premium product’s value. Use the following data to allocate $850,000 in overhead on the basis of labor cost and materials cos
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