You own a firewood business that involveschopping down trees, sawing them intolumber and transporting to the market. Youcan cut the trees into 2X4s where they are cutdown or after being transported to themarket.Cutting down treesSawing trees intolumberTransporting trees to $65 per tonthe market$38 per ton$110 per tonTransporting 2X4s to $45 per tonthe marketa. Where should you locate the sawmill tominimize costs? Why?b. Where should you locate the sawmill if theprice of lumber is $190 per ton? $215?

To minimize costs is to implement strategies and practices aimed at reducing overall expenses within…

Answered: You own a firewood business that…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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34) Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $60 to buy from farmers and $19 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $30 or processed further for $29 to make the end product industrial fiber that is sold for $77. The beet juice can be sold as is for $51 or processed further for $33 to make the end product refined sugar that is sold for $77. What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar rather than not processing that batch at all?
Colby Company makes cases for cell phones of all sizes and types for sale through specialty retailers. The company makes a standard model for the most recent iPhone as well as a deluxe model. Management has designed an ABC system with the following activity cost pools and activity rates for these models: Activity Rates Activity Cost Pool Supporting manufacturing $2 per direct labour-hour $27 per order Order processing Customer service. $68 per customer Management would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products over the last 12 months: Standard Model Deluxe Model 95 Number of cases 270 Number of orders Direct labour-hours per case. 5 0.25 47 2 0.40 67 Selling price per case $ $ $ 27 Direct materials cost per case $ 24 The company's direct labour rate is $28 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Customer margin
Old MacDonald produces hay. He has a single employee, Jack. If Jack works for x hours he can produce x bales of hay. Each bale of hay sells for $1. The cost to Jack of working x hours is c(x) = x2/10. (a) What is the efficient number of bales of hay for Jack to cut? _____________ (b) If the most that Jack could earn elsewhere is zero, how much would MacDonald have to pay him to get him to work the efficient amount? ______________ (c) What is MacDonald’s net profit? _______________ (d) Suppose that Jack would receive $1 for passing out leaflets, an activity that involves no effort whatsoever. How much would he have to receive from MacDonald for producing the efficient number of bales of hay? ____________ (e) Suppose now that the opportunity for passing out leaflets is no longer available, but that MacDonald decides to rent his hayfield out to Jack for a flat fee. How much would he rent it for? ___________
Elroy Racers makes bicycles. It has always purchased its bicycle tires from the M. Wilson Tires at $25 each but is currently considering making the tires in its own factory. The estimated costs per unit of making the tires are as follows: Direct materials $8 Direct labor $5 Variable manufacturing overhead $7 The company’s fixed expenses would increase by $60,000 per year if managers decided to make the tire.(b)What qualitative factors should Elroy Racers consider in making this decision?
Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $53 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79. What is the financial advantage (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is?
Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.30 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Activity Measure Activity for the Year Cleaning carpets Square feet cleaned (00s) 9,500 hundred square feet Travel to jobs Miles driven 292,000 miles Job support Number of jobs 2,000 jobs Other (organization-sustaining costs and idle…
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 OLN3+ 1 2 4 $48,000 11,600 11,600 11,600 + replace Machine A Machine B 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 12% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) Machine B $58,000 11,200 11, 200 11,200 11,200 + replace Annual Rental Payment
Mo Furniture manufactures a frame for use in its production of sofas. When 10,000 frames are produced, the costs per unit are: Direct materials $ 12 Direct manufacturing labor 60 Variable manufacturing overhead 24 Fixed manufacturing overhead 32 Total $128 A company has offered to sell Mo Furniture 10,000 sofa frames for $120 per unit. Fixed manufacturing overhead of $20 per unit used to make the frame could be eliminated if the frames were purchased instead of made. What is the relevant cost per unit to make the frame in this make or buy decision?
Arlan Rhode admired his friend John Parker's success at selling scarves at local crafts shows, so he decided to make two types of plant stands to sell at the shows. Arlan makes twig stands out of downed wood from his backyard and the yards of his neighbors, so his variable cost is minimal (wood screws, glue, and so forth). However, Arlan has to purchase wood to make his oak plant stands. His unit prices and costs are as follows: View the data. The twig stands are more popular, so Arlan sells four twig stands for every one oak stand. John charges her friend $490 to share her booth at the craft shows (after all, she has paid the entrance fees). How many of each plant stand does Arlan need to sell to break even? Will this affect the number of scarves John needs to sell to break even? Explain. Determine how many of each plant stand Arlan needs to sell to breakeven. Begin by computing the weighted-average contribution margin per unit. First identify the formula labels, then complete the…
Check my work Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.60 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (00s) Activity for the Year 14, 500 hundred square feet Miles driven 308,000 miles Number of…
Sheridan's Fish House can produce and sell only one of the following two products: Fried catfish Fried grouper Fryer Hours Required O $12700 O $38100 O $50800 O $63500 3 4 Contribution Margin Per Unit $15 $16 The company has fryer capacity of 12700 hours. How much will the contribution margin be if it produces only the most profitable product?
Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Italian Grill's unit cost of making the bread. Direct material Direct labor Italian Grill Outsourcing Decision Variable overhead Variable cost per unit Plus: Fixed overhead per unit Cost per unit K

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