Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 26, Problem 26.17EX
Pareto chart for a service company
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities, and activity costs of Three Rivers are identified as follows:
| Activities | Activity Cost |
| Billing error correction | $ 60,000 |
| Cable signal testing | 140,000 |
| Reinstalling service (installed incorrectly the first time) | 40,000 |
| Repairing satellite equipment | 50,000 |
| Repairing underground cable connections to the customer | 25,000 |
| Replacing old technology cable with higher quality cable | 175,000 |
| Replacing old technology signal switches with higher quality switches | 150,000 |
| Responding to customer home repair requests | 30,000 |
| Training employees | 80,000 |
| Total | $750,000 |
Prepare a Pareto chart of these activities.
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Splish College provides its own housekeeping services. The College director would like to outsource this service and has found a
company that will provide the service for $49 per hour. The following information has been collected about the cost per hour to the
college for performing its own housekeeping services
Cost per hour of service:
Cleaning supplies
$3
Direct labour costs
$27
Variable overhead
$1
Total hours of housekeeping services per year
3,040
Total fixed overhead
$55,080
(a)
Your answer is partially correct
Determine whether Splish College should outsource housekeeping, assuming that 50% of fixed costs can be eliminated if the
service is outsourced. (If an amount reduces the net income then enter with a negative sign preceding the number, eg-15,000 or
parenthesis, eg (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving
this problem.)
amber of hours:
040
In-house
eaning supplies…
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⦁ Big Sky Dermatology Specialist are setting the price on a new office location. Here are the relevant data estimates:Variable Cost Per Visit $8.00Annual Direct fixed Cost $650,000Annual overhead allocation $65,000Expected annual utilization 10,000 visits
⦁ What per visit price must be set for the service to break-even? To earn an annual profit of $100,000?Insert your response here.
Per visit price= Variable cost + fixed cost + annual overhead / total # number of visits(variable cost *volume)
Per visit price = 8*10,000 + 650,000 + 65,000/ 10,000= 80,000 + 650,000 + 65,000/ 10,000= 795,000/10,000Per visit price = 79.5
Per visit price = total cost incurred by + desired profit/ total number of visits=79.5*10,000 + 100,000 /10,000= 895,000/10,000= 89.5To earn an annual…
Chapter 26 Solutions
Financial & Managerial Accounting
Ch. 26 - Prob. 1DQCh. 26 - Prob. 2DQCh. 26 - Why is a product-oriented layout preferred by lean...Ch. 26 - Prob. 4DQCh. 26 - Prob. 5DQCh. 26 - Why would a lean manufacturer strive to produce...Ch. 26 - Prob. 7DQCh. 26 - Prob. 8DQCh. 26 - Prob. 9DQCh. 26 - Why is the direct labor cost category eliminated...
Ch. 26 - Prob. 11DQCh. 26 - Prob. 12DQCh. 26 - Prob. 13DQCh. 26 - Lead time Rough Riders Inc. manufactures jeans in...Ch. 26 - Lean features Which of the following are features...Ch. 26 - Lean accounting The annual budgeted conversion...Ch. 26 - Cost of quality report A quality control activity...Ch. 26 - Process activity analysis Roen Company incurred an...Ch. 26 - Prob. 26.1EXCh. 26 - Prob. 26.2EXCh. 26 - Lean principles Active Apparel Company...Ch. 26 - Lead time analysis Palm Pals Inc. manufactures toy...Ch. 26 - Reduce setup time Hammond Inc. has analyzed the...Ch. 26 - Calculate lead time Flint Fabricators Int....Ch. 26 - Calculate lead time Williams Optical Inc. is...Ch. 26 - Prob. 26.8EXCh. 26 - Prob. 26.9EXCh. 26 - Lean principles for a restaurant The management of...Ch. 26 - Prob. 26.11EXCh. 26 - Lean accounting Westgate Inc. uses a lean...Ch. 26 - Lean accounting Modern Lighting Inc. manufactures...Ch. 26 - Lean accounting Vintage Audio Inc. manufactures...Ch. 26 - Pareto chart Meagher Solutions Inc. manufacture....Ch. 26 - Prob. 26.16EXCh. 26 - Pareto chart for a service company Three Rivers...Ch. 26 - Cost of quality and value-added/non-value-added...Ch. 26 - Process activity analysis The Brite Beverage...Ch. 26 - Process activity analysis for a service company...Ch. 26 - Prob. 26.21EXCh. 26 - Prob. 26.1APRCh. 26 - Lead time Sound Tek Inc. manufactures electronic...Ch. 26 - Lean accounting Dashboard Inc. manufactures and...Ch. 26 - Pareto chart and cost of quality report for a...Ch. 26 - Prob. 26.1BPRCh. 26 - Lead time Master Chef Appliance Company...Ch. 26 - Lean accounting Com-Tel Inc. manufactures and...Ch. 26 - Pareto chart and cost of quality report for a...Ch. 26 - Prob. 1ADMCh. 26 - Turn around time in an operating room of a...Ch. 26 - Prob. 3ADMCh. 26 - Ethics in Action In August, Lannister Company...Ch. 26 - Prob. 26.3TIF
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