Solve this accounting problem Westport Inspection Service specializes in inspecting cars that havebeen returned to automobile leasing companies at the end of theirleases. Westport's charge for each inspection is $60; its average cost perinspection is $15. The owner wants to expand his business by hiringanother employee and purchasing an automobile. The fixed costs of thenew employee and automobile would be $3,000 per month.Required:How many inspections per month would the new employee have toperform to earn a profit of $1,500?

Step 1: Definition of Cost-volume-profit analysisThe cost-volume-profit analysis describes the…

Answered: Westport Inspection Service specializes…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 12EA: Markson and Sons leases a copy machine with terms that include a fixed fee each month of $500 plus a...

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Accounting Zain must decide how best to use a monthly factory capacity of 1,500 units. Demand from regular customers is risky and could be either 500, 600 or 700 units per month. Regular customers generate contribution of $6 per unit. Zain has the opportunity to enter a special contract which will generate contribution of only $4 per unit. For the special contract, she must enter a binding agreement now at a level of 1000, 800 оr 600 units. Instructions: Display all possible contributions in the table below. Show your calculation. Special contract Demand units 1000 800 600 500 600 700
An automotive repair shop employs automotive technicians to work on customers' cars. Suppose the prevailing billing rate for other repair shops is $40 per hour. If the repair shop decides to charge customers the prevailing rate, what hourly rate can the technicians be paid in order to maintain a 130% markup on employee's pay?
Fidelity Life Insurance has a document imaging system that needs replacement. A local salesperson quoted a cost of $10,000 with an estimatedsalvage of $900 after 5 or more years. If the system is expected to save $1700 per year in clerical time, find the payback time at 8% per year. As a practice, the office manager purchases equipment only when the payback is less than 6 years. Otherwise, he prefers to lease. Should the imaging system be purchased or leased?
Markson and Sons leases a copy machine with terms that include a fixed fee each month of $500 plus a charge for each copy made. The company uses the high-low method to analyze costs. If Markson paid $360 for 5,000 copies and $280 for 3,000 copies, how much would Markson pay if it made 7,500 copies?
Able Transport operates a tour bus that they lease with terms that involve a fixed fee each month plus a charge for each mile driven. Able Transport drove the bus 7,000 miles and paid a total of $1,360 in June. In October. Able Transport paid $1,280 for the 5,000 miles driven. If Able Transport uses the high-low method to analyze costs, how much would Able Transport pay in December, if they drove 6,000 miles?
You are a management accountant for Time Treasures Company, whose company has recently signed an outsourcing agreement with Spotless. Inc., a janitorial service company. Spotless will provide all of Time Treasures janitorial services, including sweeping floors, hauling trash, washing windows, stocking restrooms, and performing minor repairs. Time Treasures will be billed at an hourly rate based on the type of service performed. The work of common laborers (sweeping, hauling trash) is to be billed at $8 per hour. More skilled (repairs) and more dangerous work (washing outside windows on the 23rd floor) are to be billed at $18 per hour. Supervisory time is to be billed at $20 per hour. Spotless will submit monthly invoices, which will show the number and types of hours for which Time Treasures is being charged. The outsourcing contract is simple and straightforward. A. What are some of the internal control problems you foresee as a result of our sourcing the janitorial service with this contract? B. Explain recommendations to control risk that would you suggest after reviewing the contract.
The Expenditure Approval Process Roberto is the plant superintendent of a small manufacturing company that is owned by a large corporation. The corporation has a policy that any expenditure over $1,000 must be approved by the chief financial officer in the corporate headquarters. The approval process takes a minimum of three weeks. Roberto would like to order a new labeling machine that is expected to reduce costs and pay for itself in six months. The machine costs $2,200, but Roberto can buy the sales reps demo for $1,800. Roberto has asked the sales rep to send two separate bills for $900 each. What would you do if you were the sales rep? Do you agree or disagree with Robertos actions? What do you think about the corporate policy?
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?
Sure Care Health Maintenance Organization is seeking a managed care contract with a local manufacturing plant. Sure Care estimates that the cost of providing preventative and curative care for the 300 employees and their families will be $36,000 per month. The manufacturing company offered Sure Care a premium bid of $200 per employee per month. If Sure Care accepts this bid and contracts with the manufacturing firm, will Sure Care earn a profit or loss for the year? How much? Describe the steps you used to solve this question.
Automatic versus Manual ProcessingPhoto Station Company operates a printing service for customers with digital cameras. The current service, which requires employees to download photos from customer cameras, has monthly operating costs of $9,000 plus $0.20 per photo printed. Management is evaluating the desirability of acquiring a machine that will allow customers to download and make prints without employee assistance. If the machine is acquired, the monthly fixed costs will increase to $14,000 and the variable costs of printing a photo will decline to $0.04 per photo.(a) Determine the total costs of printing 20,000 and 50,000 photos per month. Units Current Process Proposed Process 20,000 Answer Answer 50,000 Answer Answer (b) Determine the monthly volume at which the proposed process becomes preferable to the current process.Answer units
Fusion Metals Company needs a new manager for its Cutting Department. It is considering closing its Packaging Department, and if it does the Packaging Department manager will be appointed manager of the Cutting Department. The Packaging Department manager makes $45,000 per year. To hire a newCutting Department manager from outside the company will cost Fusion $60,000 per year. Required: Discuss the relevance of each of these salary figures to the department-closing decision.
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