Horngren's Cost Accounting, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134476032
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 11, Problem 11.28E
Selection of most profitable product. Body Image, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows:
The weight-lifting craze suggests that Body Image can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same production departments. Which product should the company produce? Briefly explain your answer.
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Hurney Corporation manufactures plastic water bottles. It plans to grow by producing high-quality water bottles at a low cost that are delivered in a timely manner. There are a number of other manufacturers who produce similar water bottles. Hurney believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy.
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Planet Fit,
Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows:
LOADING...
(Click
the icon to view the data.)
The weight-lifting craze suggests that
Planet Fit
can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same production departments.
Read the
requirements
LOADING...
.
Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin per machine hour for each machine. (Reduce the fixed manufacturing overhead to the lowest possible ratio of machine hours in order to calculate the contribution margin per machine hour. Example: 8:4 would be 2:1. Enter the amounts to the nearest cent.)
Model 9
Model 14
-
=
Contribution margin per unit
÷
=
Contribution margin…
Andrews Ceramics produces specialty ceramic products for multiple uses. The company is evaluating a proposal from a start-up company that is
manufacturing micro generators. The start-up wishes to purchase a quantity of your Type D48 ceramic spools. You believe that micro generators
could be a growth market in the future. Being an early supporter of the start-up business could allow for substantial future business for your
company.
Using regression analysis, determine the cost-estimating equation to manufacture Type D48 ceramic spools.
Month Spools Produced Manufacturing Costs
January
7,920
$12,416
February
10,571
$11,400
March
7,560
$8,526
April
10,875
$12,420
May
13,695
$17,221
June
12,150
$15,552
July
6,448
$12,760
August
9,801
$15,077
September
13,365
$15,675
October
12,672
$18,018
November
5,360
$10,032
December
8,276
$12,974
What is the lowest price that your company could accept without making the company worse off?
Chapter 11 Solutions
Horngren's Cost Accounting, Student Value Edition (16th Edition)
Ch. 11 - Prob. 11.1QCh. 11 - Define relevant costs. Why are historical costs...Ch. 11 - All future costs are relevant. Do you agree? Why?Ch. 11 - Distinguish between quantitative and qualitative...Ch. 11 - Describe two potential problems that should be...Ch. 11 - Variable costs are always relevant, and fixed...Ch. 11 - A component part should be purchased whenever the...Ch. 11 - Prob. 11.8QCh. 11 - Managers should always buy inventory in quantities...Ch. 11 - Management should always maximize sales of the...
Ch. 11 - Prob. 11.11QCh. 11 - Cost written off as depreciation on equipment...Ch. 11 - Managers will always choose the alternative that...Ch. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Qualitative and quantitative factors. Which of the...Ch. 11 - Special order, opportunity cost. Chade Corp. is...Ch. 11 - Prob. 11.18MCQCh. 11 - Keep or drop a business segment. Lees Corp. is...Ch. 11 - Relevant costs. Ace Cleaning Service is...Ch. 11 - Disposal of assets. Answer the following...Ch. 11 - Relevant and irrelevant costs. Answer the...Ch. 11 - Multiple choice. (CPA) Choose the best answer. 1....Ch. 11 - Special order, activity-based costing. (CMA,...Ch. 11 - Make versus buy, activity-based costing. The...Ch. 11 - Inventory decision, opportunity costs. Best Trim,...Ch. 11 - Relevant costs, contribution margin, product...Ch. 11 - Selection of most profitable product. Body Image,...Ch. 11 - Theory of constraints, throughput margin, relevant...Ch. 11 - Closing and opening stores. Sanchez Corporation...Ch. 11 - Prob. 11.31ECh. 11 - Relevance of equipment costs. Janets Bakery is...Ch. 11 - Equipment upgrade versus replacement. (A. Spero,...Ch. 11 - Special order, short-run pricing. Diamond...Ch. 11 - Short-run pricing, capacity constraints. Fashion...Ch. 11 - International outsourcing. Riverside Clippers Corp...Ch. 11 - Relevant costs, opportunity costs. Gavin Martin,...Ch. 11 - Opportunity costs and relevant costs. Jason Wu...Ch. 11 - Opportunity costs. (H. Schaefer, adapted) The Wild...Ch. 11 - Make or buy, unknown level of volume. (A....Ch. 11 - Make versus buy, activity-based costing,...Ch. 11 - Prob. 11.42PCh. 11 - Product mix, special order. (N. Melumad, adapted)...Ch. 11 - Theory of constraints, throughput margin, and...Ch. 11 - Theory of constraints, contribution margin,...Ch. 11 - Closing down divisions. Ainsley Corporation has...Ch. 11 - Dropping a product line, selling more tours....Ch. 11 - Prob. 11.48PCh. 11 - Dropping a customer, activity-based costing,...Ch. 11 - Equipment replacement decisions and performance...
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