Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 10, Problem 16PB
At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown:
What is the annual financial impact of hiring the extra worker for the bottleneck process?
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Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $54,000 per year, to solve the problem. With this extra worker, the company could
produce and sell 2,900 more units per year. Currently, the selling price per unit is $25.00 and the cost per unit is $7.50.
$3.40
1.00
0.40
2.70
$7.50
Direct materials
Direct labor
Variable overhead
Fixed overhead (primarily depreciation of equipment)
Total
Using the Information provided, calculate the annual financial Impact of hiring the extra worker.
Profit $
Increase ✔
At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $55,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.75 as shown:
Direct material
$4.45
Direct labor
2.10
Variable overhead
1.40
Fixed overhead (primarily depreciation of equipment)
3.80
Total
$11.75
What is the annual financial impact of hiring the extra worker for the bottleneck process?
$______ __________
At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $56,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.70 as shown:
Direct material
$4.50
Direct labor
2.05
Variable overhead
1.40
Fixed overhead (primarily depreciation of equipment)
3.75
Total
$11.70
What is the annual financial impact of hiring the extra worker for the bottleneck process?
Chapter 10 Solutions
Principles of Accounting Volume 2
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