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What is the profit per day of Machine A? 2. What is the profit per day of Machine B? 3. What would the percent of parts rejected have to be for Machine B to be as profitable as Machine A?

What is the profit per day of Machine A? 2. What is the profit per day of Machine B? 3. What would the percent of parts rejected have to be for Machine B to be as profitable as Machine A?

FINANCIAL ACCOUNTING
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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1. What is the profit per day of Machine A?

2. What is the profit per day of Machine B?

3. What would the percent of parts rejected have to be for Machine B to be as profitable as Machine A?

 

Two currently owned machines are being considered for the production of a part. The capital investment associated with the machines is about the same. The important differences between the machines are their production capacities (production rate x available production hours) and their reject rates (percentage of parts produced that cannot be sold). The material cost is P300.00 per part, and all defect-free parts produced can be sold for P600 each. (Rejected parts have negligible scrap value.) For either machine, the operator cost is P750.00 per hour and the variable overhead rate for traceable costs is P250.00 per hour. Considering the table below: Production Rale Hours available for production Percent ports rejected Mochine A 100 paris/tx 7 hours/day 10% Machine B 130 purls/h 6 hours/day 13%
Transcribed Image Text:Two currently owned machines are being considered for the production of a part. The capital investment associated with the machines is about the same. The important differences between the machines are their production capacities (production rate x available production hours) and their reject rates (percentage of parts produced that cannot be sold). The material cost is P300.00 per part, and all defect-free parts produced can be sold for P600 each. (Rejected parts have negligible scrap value.) For either machine, the operator cost is P750.00 per hour and the variable overhead rate for traceable costs is P250.00 per hour. Considering the table below: Production Rale Hours available for production Percent ports rejected Mochine A 100 paris/tx 7 hours/day 10% Machine B 130 purls/h 6 hours/day 13%
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