Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to two different locations considered for a new manufacturing facility.LOCATIONANNUAL FIXED COSTS UNIT VARIABLE COSTSSite A$120,000Site B$110,000a.The breakeven point for these two locations is 909 units per yearb Se B is the desired location if the production rate is 1000 units per yearThe breakeven point for these two locations is 625 units per yeard Ste A is the desired location if the production rate is 500 mits per year$18$29

The Break-Even Model in facility location selection involves determining the level of activity at…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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An operations manager narrowed the search for a new facility location to four communities. The annual fixed costs (land, property taxes, insurance, equipment, and buildings) and the variable costs (labor, materials, transportation, and variable overhead) are as follows:Community Fixed Costs per Year Variable Costs per UnitA $150,000 $62B $300,000 $38C $500,000 $24D $600,000 $30Notice that no community dominates the set of alternatives; that is, no community has both the lowest fixed costs and the lowest variable costs per unit. If that were so, that community would be the best location.Step 1. Plot the total cost curves for all the communities on a single graph. Identify on the graph the approximate volume range over which each community provides the lowest cost.Step 2. Using break-even analysis, calculate the break-even quantities over the relevant ranges. If the expected demand is 15,000 units per year, what is the best location?
Required: What if Fisher Company had 10 additional machine hours (cutting) with all other resources held constant? a. What is the associated total contribution margin? Round the units of A and B to two decimal places, and round intermediate calculations and your final answer to the nearest dollar. b. What is the incremental benefit per machine hour caused by the additional ten hours, if any?
3. International Machine Manufacturing Company is preparing to build a new plant by considering three potential processes for it. International Machine Manufacturing Company has identified three process alternatives and developed costs as well. The fixed and variable costs for the three alternative processes are presented below. Process A, B and C are the name of three process alternatives. The cost data are as follows: Process A Process B Process C Annual Contracted Units 350,000 350,000 350,000 Annual fixed cost OMR 100,000|OMR 250,000 OMR 550,000 Variable cost (Per Unit) OMR 16 OMR 12 OMR 10 Calculate the following by using the data given: a. Identify the best process to be followed by the International Machine Manufacturing Company. b. Determine the Economical Volume for each process. C. Determine the best process for each of the following volumes: (i) 100,000 275,000 (iii) 325,000 (ii)
If the indirect costs for each duration are $300 for 27 weeks, $240 for 26 weeks, $180 for 25 weeks, $120 for 24 weeks, $60 for 23 wowowo (weeks, and $50 for 22 weeks, compute the direct, indirect, and total costs for each duration. What is the optimum cost-time INCONDUGULILE T DONDO schedule? waiting thalin www.tomamilionima Ellenton Act. = m ---- B Crash Cost (Slope) 80 30 40 50 100 30 Maximum Crash Time Normal Time 23124= 10 855560 15 Normal Cost 40 10 80 51 50 TUT 100 20 $300 Time unit 1 wook
1. Calculate the breakeven point in units for the Peoria plant and for the Moline plant. 2. Calculate the operating income that would result from the production manager’s plan to produce 96,000 units at each plant.
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Provide answer in table format Gelb Company currently manufactures 44,000 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related to making this component are $77,000 per year, and allocated fixed costs are $61,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 44,000 units and buying 44,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier?
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