xercise 13-13 (Algo) Sell or Pro
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Q: Futura Company purchases the 50,000 starters that it installs in its standard line of farm tractors…
A: Financial advantage (disadvantage) of making the starters = (Purchase price per unit - Relevant…
Q: Futura Company purchases the 40,000 starters that it installs in its standard line of farm per unit.…
A: In making a Make or Buy decision, relevant costs of the purchase should be compared with relevant…
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Q: Sell or Process Further Bunyon Lumber Company incurs a cost of $398 per hundred board feet (hbf) in…
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Q: Merrimac Manufacturing Company has always purchased a certain component part from a supplier on the…
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Exercise 13-13 (Algo) Sell or Process Further Decision [LO13-7]
Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and
Required:
1. What is the financial advantage (disadvantage) of further processing product X15?
2. Should product X15 be processed further or sold at the split-off point?
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- Exercise 11-10 (Static) Make or Buy Decision [LO11-3] Futura Company purchases the 40,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $8.40 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $9.20 as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit $ 3.10 2.70 1.50 1.00 0.60 0.30 $9.20 Total $ 60,000 $ 40,000 $ 12,000 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $60,000) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total…Exercise 11-10 (Algo) Make or Buy Decision [LO11-3] Futura Company purchases the 68,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $11.80 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $13.00 as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit $ 6.00 2.80 1.70 1.40 0.50 0.60 $13.00 Total $ 115,600 $ 95,200 $ 40,800 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $115,600) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total…pleasehelp32 Fone Zone Corporation manufactures telephones. Recently, the company produced a batch of 640 defective telephones at a cost of $9,400. Fone Zone can sell these telephones as scrap for $10 each. It can also rework the entire batch at a cost of $6,900, after which the telephones could be sold for $21 per unit. If Fone Zone reworks the defective telephones, by how much will its operating income change? Multiple Choice Increase by $7,040 Increase by $6,540 Decrease by $2,860 Decrease by $6,540
- Rock Solld concrete manufacturers supply cement mixture directly to both the construction Industry and building supply retailers located throughout the country. The company has three machines each with a 100% capacity (60 hours) of 40 tons per week. Due to electricity supply concerns, the machines have only been able to operate at 75% capacity. One ton of cement mixture requires 400 kg of Product M and 600 kg of Product N. Ignore any wastage. Product M is purchased at R80/kg and Product N at R25/kg. Each machine requires five operators. Assume four (4) weeks per month. All materials purchased are used in the mix of cement and all cement is sold in the month it is manufactured. The cement plant takes up 90% of the total floor space. The following is an extract of some of the transactions for the month: NO 1 2 3 4 5 6 TRANSACTION Purchase the required quantity of Product M for the month. Purchase the required quantity of Product N for the month. The machine operators earn R2 000 each per…7. Equipment costing PIM is expected to produce 10. 000 pieces of pipes dur ing its economic life before being replaced. Annual production of this equipment is 2, 500 pipes. The equi pment' s scrap value is estimated at P50, 000. The cost of housing the equipment is P25, 000 per year. Costs of power and maintenance per unit are P9. 00 and P7. 00, respectively. Cost of labor is P35. 00 per unit. Use sinking fund method of depreciation with = 12% a. What is the total fixed cost? b. What is the variable cost per unit? c. What is the total cost of production per unit?2 Campbell Company currently produces and sells 7,600 units annually of a product that has a variable cost of $12 per unit and annual fixed costs of $373,000. The company currently earns a $83,000 annual profit. Assume that Campbell has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $10 per unit. The investment would cause fixed costs to increase by $9,300 because of additional depreciation cost. Required a. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used), b. Prepare a contribution margin income statement, assuming that Campbell invests in the new production equipment. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a contribution margin income statement, assuming that Campbell invests in the new production equipment. CAMPBELL COMPANY Contribution margin Income statement Sales Variable costs…
- Sell or Process Further Jackson Lumber Company incurs a cost of $374 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $546 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $529 per hbf, which can be sold for $746 per hbf. Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) August 9 Revenues, per 100 board ft. Costs, per 100 board ft. Income (Loss), per 100 board ft. Sell Rough-Cut (Alternative 1) $ Process Further into Finished Cut (Alternative 2) Differential Effect on Income (Alternative 2) 4 Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). Process…Answer and solution please. Thank you! Assume that Whitehall Corporation agreed to sell AM-12 to Flank Corporation after further processing forP5.50 per unit. During the first month of production, Whitehall sold 50,000 units with 10,000 units remainingin inventory at the end of the month. Joint costs attributable to AM-12 were P180,000, and costs ofprocessing AM-12 further were P90,000. With respect to AM-12, which one of the following statements iscorrect?a. The operating profit last month was P50,000 and the inventory value is P15,000b. The operating profit last month was P50,000 and the inventory value is P45,000c. The operating profit last month was P125,000 and the inventory value is P30,000d. The operating profit last month was P200,000 and the inventory value is P45,000Question 13 Earl’s Hurricane Lamp Oil Company produces both A-1 Fancy and B Grade Oil. There are approximately $18,000 in joint costs that Earl may allocate using the relative sales value at splitoff or the net realizable value approach. At splitoff, A-1 sells for $20,000 while B grade sells for $40,000. After an additional investment of $10,000 after splitoff, $3,000 for B grade and $7,000 for A-1, both the products sell for $50,000. What is the difference in allocated costs for the A-1 product assuming applications of the net realizable value and the sales value at splitoff approach? Group of answer choices A-1 Fancy has $2,600 less joint costs allocated to it under the net realizable value approach than the sales value at splitoff approach. A-1 Fancy has $2,600 more joint costs allocated to it under the net realizable value approach than the sales value at splitoff approach. A-1 Fancy has $1,500 less joint costs allocated to it under the net realizable value approach than…
- + 8 of 5 oped Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $9.11 million, and the equipment has a useful life of 7 years with a residual value of $1,200,000. The company will use straight- line depreciation. Beacon could expect a production increase of 44,000 units per year and a reduction of 20 percent in the labor cost per unit. Proposed (automation) 115,000 units Current (no automation) 71,000 units Per Per Production and sales volume Unit Total Unit Total ook Sales revenue $ 90 $ ? $ 90 $ ? Variable costs. Direct materials $16 $ 16 Direct labor 15 int Variable manufacturing overhead 9 ? 9 Total variable manufacturing costs 40 ? Contribution margin $50 ? $ 53 ? Fixed manufacturing costs $ 1,130,000 $ 2,330,000 ences Net operating income ? ? 3. Determine the project's payback period. (Round your answer to 2 decimal places.)…38. RYX Company has the chance to introduce a new product. RYX expects the product to sell for P75 with a variable cost per unit of P50. The annual fixed costs, depreciation not included is P4,500,000. The company expects to sell 300,000 units. To produce a new product line, the company needs to purchase a new machine that costs P6,000,000. The new machine is expected to last for four years with a very negligible salvage value. The company has a policy of depreciating its machine for both book and tax purposes for four years. The company has a marginal cost of capital of 13.75% and is subject to a tax rate of 40%. How much is the machine’s net present value?BCD Company has 7,000 obsolete toys carried in inventory at a manufacturing cost of Phó per unit. If the toys are reworked for Ph 2 per unit, it could be sold for Ph 3 per unit. If the toys are scrapped, it could be sold for Ph 1.85 per unit. Which alternative is more desirable(rework or scrap) and what is the total peso amount of the advantage of that alternative? scrap, Ph 5,950 rework, Ph 36,050 scrap, Ph 47,950 O rework, Ph 8,050
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