COST ACCT-W/ACCESS >C< NON-MAJORS
15th Edition
ISBN: 9781269768191
Author: Horngren
Publisher: PEARSON C
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Textbook Question
Chapter 3, Problem 3.49P
Deciding where to produce. (CMA, adapted) Portal Corporation produces the same power generator in two Illinois plants, a new plant in Peoria and an older plant in Moline. The following data are available for the two plants:
All fixed costs per unit are calculated based on a normal capacity usage consisting of 240 working days. When the number of working days exceeds 240, overtime charges raise the variable
Portal Corporation is expected to produce and sell 192,000 power generators during the coming year.
Wanting to take advantage of the higher operating income per unit at Moline, the company’s production manager has decided to manufacture 96,000 units at each plant, resulting in a plan in which Moline operates at maximum capacity (320 units per day × 300 days) and Peoria operates at its normal volume (400 units per day × 240 days).
- 1. Calculate the breakeven point in units for the Peoria plant and for the Moline plant. Required
- 2. Calculate the operating income that would result from the production manager’s plan to produce 96.000 units at each plant.
- 3. Determine how the production of 192,000 units should be allocated between the Peoria and Moline plants to maximize operating income for Portal Corporation. Show your calculations.
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Deciding where to produce. (CMA, adapted) Portal Corporation produces the same power generatorin two Illinois plants, a new plant in Peoria and an older plant in Moline. The following data are availablefor the two plants:All fixed costs per unit are calculated based on a normal capacity usage consisting of 240 working days.When the number of working days exceeds 240, overtime charges raise the variable manufacturing costs ofadditional units by $3.00 per unit in Peoria and $8.00 per unit in Moline.Portal Corporation is expected to produce and sell 192,000 power generators during the coming year.Wanting to take advantage of the higher operating income per unit at Moline, the company’s productionmanager has decided to manufacture 96,000 units at each plant, resulting in a plan in which Moline operatesat maximum capacity (320 units per day * 300 days) and Peoria operates at its normal volume(400 units per day * 240 days).1. Calculate the breakeven point in units for the Peoria plant and…
please step by step solution.
Cairney, Incorporated manufactures a specialized part used in internal combustion
engines. The annual demand for the part is 261,000 units. The facility has a practical
capacity of 276,000 units annually. The company leased the current facility because
facilities capable of manufacturing the unit require machines that can produce
69,000 units each. The annual cost of the facility is $1,092,960. The variable cost of a
part is $4.
Required:
a. What cost per unit should the cost system report to facilitate management
decision making?
Note: Round your answer to 2 decimal places.
b. What is the cost of excess capacity?
a. Cost per unit
b. Cost of excess capacity
$
$
8.19
122,850
Chapter 3 Solutions
COST ACCT-W/ACCESS >C< NON-MAJORS
Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
Ch. 3 - Give an example of how a manager can increase...Ch. 3 - What is operating leverage? How is knowing the...Ch. 3 - There is no such thing as a fixed cost. All costs...Ch. 3 - Prob. 3.14QCh. 3 - In CVP analysis, gross margin is a less-useful...Ch. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.23ECh. 3 - Prob. 3.24ECh. 3 - Prob. 3.25ECh. 3 - Prob. 3.26ECh. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.28ECh. 3 - Prob. 3.29ECh. 3 - Prob. 3.30ECh. 3 - Prob. 3.31ECh. 3 - Prob. 3.32ECh. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - Prob. 3.34PCh. 3 - Prob. 3.35PCh. 3 - Prob. 3.36PCh. 3 - Prob. 3.37PCh. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - Prob. 3.39PCh. 3 - Prob. 3.40PCh. 3 - Prob. 3.41PCh. 3 - Prob. 3.42PCh. 3 - Prob. 3.43PCh. 3 - Prob. 3.44PCh. 3 - Prob. 3.45PCh. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.47PCh. 3 - Prob. 3.48PCh. 3 - Deciding where to produce. (CMA, adapted) Portal...
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