Zen Inc. uses one raw material type in its manufacturing process. It needs 3,750 kilos of this material each month. It incurs P500 each time when making and receiving orders. Annual carrying cost per unit costs P15 in warehousing and P5 in financing costs. If Zen purchases

Zen Inc. uses one raw material type in its manufacturing process. It needs 3,750 kilos of this material each month. It incurs P500 each time when making and receiving orders. Annual carrying cost per unit costs P15 in warehousing and P5 in financing costs. If Zen purchases

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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Pam-Tees Company plans to sell 11,000 T-shirts at $15 each in the coming year. Product costs include: Direct materials per T-shirt $4.75 Direct labour per T—shirt $2.25 Variable overhead per T- shirt $0.50 Total fixed factory overhead $32,000 Variable selling expense is the redemption of a coupon, which averages $0.70 per T-shirt; ﬁxed selling and administrative expenses total $17,000. Required: Calculate the: 1. Variable product cost per unit 2. Contribution margin ratio (rounded to four signiﬁcant digits) 3. Total ﬁxed expense for the year 4. Break Even point in quantity (Q) 5. Margin of Safety in Quantity (Q)
Specter Company makes 20,000 units per year of a part it uses in the products it manufactures.The unit product cost of this part is computed as follows:Direct materials $25.10Direct labour 18.20Variable manufacturing overhead 2.40Fixed manufacturing overhead 13.40Unit product cost $56.70An outside supplier has offered to sell the company all these parts it needs for $56.00 a unit. Ifthe company accepts this offer, the facilities now being used to make the part could be used tomake more units of a product that is in high demand. The additional contribution margin on thisother product would be $50,000 per year.If the part were purchased from the outside supplier, all the direct labour cost of the part wouldbe avoided. However, $5.10 of the fixed manufacturing overhead cost being applied to the partwould continue even if the part were purchased from the outside supplier. This fixedmanufacturing overhead cost would be applied to the company's remaining products.Required:Part a:Calculate…
Jade Ltd. manufactures a product, which regularly sells for $67.75. This product has the following costs per unit at the expected production of 47,500 units: Cost Amount Direct labour $20.00 Direct materials 10.50 Manufacturing overhead (36% is variable) 24.00 The company has the capacity to produce 52,250 units. A wholesaler has offered to pay $77 for 12,000 units. If Jade Ltd. accepts this special order, operating income would increase (decrease) by how much?
ChimneySweep provides cleaning services for residential chimneys and fireplaces. The cleaning service requires $35 in variable costs for cleaning materials. The fixed costs of labor, the company’s truck, and administrative support are $165,000 per year. ChimneySweep averages 100 service calls per month. What is the average cost per cleaning service call? Round your answer to 2 decimal places.
Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000units at a price of $320 each. Product costs include: Direct materials $68Direct labor $40Variable overhead $12Total fixed factory overhead $500,000 Variable selling expense is a commission of 5 percent of price; fixed selling and administrativeexpenses total $116,400.Required:1. Calculate the sales commission per unit sold. Calculate the contribution margin per unit.2. How many units must Jay-Zee Company sell to break even? Prepare an income statementfor the calculated number of units.3. Calculate the number of units Jay-Zee Company must sell to achieve target operatingincome (profit) of $333,408.4. What if the Jay-Zee Company wanted to achieve a target operating income of $322,000?Would the number of units needed increase or decrease compared to your answer inRequirement 3? Compute the number of units needed for the new target operating income.
Al-Rafidain Company produces a fax machine, and the device's manufacturing process is part S, and the company estimates that it is for 100,000 units of the fax machine annually. The company can purchase all its needs of the tooth piece from an external supplier at a price of 9 dinars per piece. The company also estimates that there are additional costs in the case of purchase amounting to one dinar per piece, in exchange for shipping and checking the piece. The company can manufacture the part internally, and the following are the estimated costs of the manufacturing process The quantity that the company needs, amounting to 100,000 pieces total costs 400,000 dinars 200,000 200,000 350,000 1,150,000 dinars cost per piece 4 dinars 2 2 3.5 11.5 dinars direct material direct action Variable indirect industrial costs The share of the industrial costs is fixed the total Assuming that the fixed industrial costs will remain the same in the case of choosing an alternative to purchase from…
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Muspest Supplies is currently evaluating the cost of manufacturing some of the components utilised in their products. Currently the company expects to need 6 000 parts each month. A supplier of the part has been identified and the total cost of purchasing the parts on a monthly basis would be $97 000. In analysing the part costs, the direct labour and materials cost would be $64 000 and the variable overheads would be $22 000.Based only on the relevant cost per unit, which would be the preferred option of Muspest Supplies?HD EDUCATIONA. Unit costs to produce the part would be $14.33 with the unit cost to purchase of $ 16.17. In this case, the best option would be to commence purchasing the part.B. Unit costs to produce the part would be $10.67 with the unit cost to purchase of $ 16.17. In this case, the best option would be to continue to make the part.C. None of the other answers D. Unit costs to produce the part would be $14.33 with the unit cost to purchase of $ 16.17. In this case,…
Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenbergplans to sell 30,000 ceiling fans and 70,000 table fans in the coming year. Product price and costinformation includes: Ceiling Fan Table FanPrice $60 $15Unit variable cost $12 $7Direct fixed cost $23,600 $45,000Common fixed selling and administrative expenses total $85,000.Required:1. What is the sales mix estimated for next year (calculated to the lowest whole number foreach product)?2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans.How many ceiling fans and table fans are sold at break-even?3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on theunit sales calculated in Requirement 2.4. What if Vandenberg, Inc., wanted to earn operating income equal to $14,400? Calculate thenumber of ceiling fans and table…
Gustavo Fring approached Walt & Jessie Pharmaceutical Co. to buy 50 pounds of product for $50,000 a pound. Regular customers are charged $84,000 for a pound of product. Walt and Jessie Pharmaceutical Co. has the capacity to make 1000 pounds of product per month. The following costs are associated with the company's normal monthly production of the sale of 970 pounds of product: Direct Material per Pound of Product $9,000 Direct Labor per Pound of Product $2,000 Variable MOH per Pound of Product $3,000 Fixed MOH per Pound of Product $3,000 What is the minimum price Walt and Jessie Pharmaceutical Co. would be willing to accept per pound of product for the order? Round your answer to the nearest dollar. Hint: You can solve this problem using the formula for minimum transfer price. Transfer price >= incremental variable costs per unit + (Sacrificed regular contribution margin/ # units transferred) Minimum price = incremental variable costs per unit + ((# units…

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