Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
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 | $750,000 |
Prepare a Pareto chart of these activities.
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Begin by completing an analysis, and start by showing the computation of the company's contribution margin without the landscaping work from Tilman. Next calculate the contribution margin of the special order.
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$ 3,454
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$ 13
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Break-even point
enter the break-even point in number of lawns serviced per month
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Determine the company’s break-even point in dollars. (Round answer to 0 decimal places, e.g. 1,225.)
Break-even point
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Kelly Slater desires to purchase a new front office computer system for his Surfers Paradise Inn. After considerable discussion with purveyors, he has narrowed his choices to systems sold by M. Fanning ltd. and Jamie O’Brien and Co. The associated costs of each system are as follows:
M. Fanning ltd.
O’Brien and Co.
Initial Costs
29,000
31,000
Annual Costs:
Labour
22,000
22,000
Utilities
800
600
Supplies
1,500
1,500
Maintenance
2,500
1,500
Salvage Value (in 8 years)
3,000
5,000
Required:
1.Which are sunk costs?
2.Identify the irrelevant costs and explain why these costs are irrelevant!
3.Prepare a comparative cost analysis for the two alternatives. Ignore the time value of money and taxes. Include the relevant costs.
4.Which alternative do you recommend purchasing? Explain why!
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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