Couture’s Creations is considering offering Joe, an hourly employee, the opportunity to become a salaried employee. Why is this a good idea for Couture’s Creations? Is this a good idea for Joe? What if Couture’s Creations entices Joe to agree to the change by offering him a salaried position with no risk of layoff during the winter lull? What if Joe agrees and Couture’s Creations lays him off anyway six months into the agreement?
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
Principles of Accounting Volume 2
Additional Business Textbook Solutions
Construction Accounting And Financial Management (4th Edition)
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Horngren's Accounting (11th Edition)
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Managerial Accounting (5th Edition)
Horngren's Accounting (12th Edition)
- If Wu accepts the contract with Worthington, he would either have to (a) cancel two prom contracts each for one car for six hours or (b) cancel one business event for three cars contracted for two hours each. What are the relevant opportunity costs of accepting the Worthington contract in each case? Which contract should he cancel?arrow_forwardFusion Metals Company is considering the elimination of its Packaging Department. Management has received an offer from an outside firm to supply all Fusion’s packaging needs. To help her in making the decision, Fusion’s president has asked the controller for an analysis of the cost of running Fusion’s Packaging Department. Included in that analysis is $9,100 of rent, which represents the Packaging Department’s allocation of the rent on Fusion’s factory building. If the Packaging Department is eliminated,the space it used will be converted to storage space. Currently Fusion rents storage space in a nearby warehouse for $11,000 per year. The warehouse rental would no longer be necessary if the Packaging Department were eliminated. Required:1. Discuss each of the figures given in the exercise with regard to its relevance in the departmentclosing decision.2. What type of cost is the $11,000 warehouse rental, from the viewpoint of the costs of the Packaging Department?arrow_forwardHannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $10,780. The booth will be open 22 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $180 per package. She will continue to sell the existing product, EZRecords, which costs $94 per package. Ms. Ortega believes that the salesperson will spend approximately 12 hours selling EZRecords and 10 hours marketing ProOffice. Required a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 78 units of EZRecords and 59 units of ProOffice. b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 205 units of EZRecords and 110 units of ProOffice. Note: For all requirements, round "Cost per unit" to 2 decimal…arrow_forward
- Maria has a choice between two job offers. The first is in Ithaca and pays $55,000.00 annually. The second job is in Memphis and has a base pay of $45,000.00 with a 10.00% chance of earning an annual bonus of $20,000.00. In which city will Maria, a risk-neutral person, work if the selection is based only on earnings? Ithaca Part 2 ( Feedback See Hint Maria would be indifferent between these two offers if the probability of obtaining the bonus was 0.5 %. (Round to the nearest percent.)arrow_forwardDavid Kelley is considering the implementation of an incentive wage plan to increase productivity in his small manufacturing plant. The plant is nonunion, and employees have been compensated with only an hourly-rate plan. Julie Phelps, Vice President–Manufacturing, is concerned that the move to an incentive compensation plan will cause direct laborers to speed up production and, thus, compromise quality. Step 1 - With that information in mind, discuss the following questions. Your posting should be at least 500 words* in length. This means you should elaborate on your answers, not simply answer each question with one or two words. You should also reference information already learned in our studies. How might Kelley accomplish his goals while alleviating Phelps’ concerns? Does the compensation have to be all hourly rate or all incentives? Can incentive compensation also apply to service businesses?arrow_forwardPlease indicate which of the following are relevant costs for decision making. Also indicate if the cost is a sunk cost, opportunity cost, or an out of pocket cost, and your reasoning. a. The annual cost of Rent for your factory-You are debating discontinuing the product you manufacture. You are in the middle of a 10 year lease, and there is no option to terminate the lease early. b. The cost of the specialized Machines in your factory, You are debating whether to discontinue production of the product involved and buy the product from a supplier instead. c. The salvage value of the specialized Machinery in your factory from b. above. The salvage value is equal to 20% of the original cost of the Machinery and will be realized if production is discontinued. d. The cost of a new oil burner about to be installed to replace a destroyed one. e. The cost of an old inefficient oil burner that will be replaced by a more modern and efficient one. f. Depreciation expense on the old oil…arrow_forward
- Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $10,660. The booth will be open 26 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $190 per package. She will continue to sell the existing product, EZRecords, which costs $103 per package. Ms. Ortega believes that the salesperson will spend approximately 16 hours selling EZRecords and 10 hours marketing ProOffice. Required a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 73 units of EZRecords and 59 units of ProOffice.arrow_forwardHannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $14,850. The booth will be open 33 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $180 per package. She will continue to sell the existing product, EZRecords, which costs $92 per package. Ms. Ortega believes that the salesperson will spend approximately 23 hours selling EZRecords and 10 hours marketing ProOffice. Required a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 70 units of EZRecords and 46 units of ProOffice. b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 192 units of EZRecords and 104 units of ProOffice. Note: For all requirements, round "Cost per unit" to 2 decimal…arrow_forwardYou are a homeowner that has accepted a new job. The new job requires a commute that is undesirably long, but not impossible. You would like to sell your home and move into a new one nearer your job. Your discount rate for the funds received from the sale is 8% (annualized). Potential buyers will come, view and inspect the home, and negotiate a price offer. Your decision is to set (in your mind) the lowest such offer you are willing to accept. For simplicity, we will assume your decision must be an increment of 10K (i.e., 500K, 510K, 520K etc.) We will not go into the details of the negotiating process, and just assume that the eventual price offers come from a random process described below. 4. For-Sale-by-Owner. If you sell on your own, you will generate price offers that are uniformly distributed between [500K, 550K] USD, and will attract one offer every 2 months. However, as commission, the buyer’s agent will get 3% of the sale price (you will get the other 97%). a. To…arrow_forward
- Wilson is currently producing a component for one of its products. Wilson has received an offer to buy the component from an outside supplier. A machine is currently being rented to manufacture the component. If the company buys the component, the rental will be cancelled. What is the rent on the machine, in relation to the decision to make or buy the component? Sunk and therefore not relevant Avoidable and therefore not relevant Avoidable and therefore relevant Unavoidable and therefore relevantarrow_forwardJanet Garcia is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $8,700. The booth will be open 29 hours during the trade show. Ms. Garcia also plans to add a new product line, ProOffice, which will cost $190 per package. She will continue to sell the existing product, EZRecords, which costs $93 per package. Ms. Garcia believes that the salesperson will spend approximately 19 hours selling EZRecords and 10 hours marketing ProOffice. Required: a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 86 units of EZRecords and 58 units of ProOffice. (Round "Cost per unit" answers to 2 decimal places.) EZRecords ProOffice Total cost of sales Cost per unit b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 199 units…arrow_forwardCompany KIM has limited resources to invest and is currently evaluating its investment opportunities for the coming year. The company plans to purchase a digitally controlled machinery to increase its production capacity in order to meet increasing demand. As technology evolves, the company is facing skill gap and plans to invest in workforce upskilling through employee training and development. However, employees’ upskilling needs depend on their current skills and their role in the company. The company can also recruit professional outsiders by offering attractive salary packages. Which investment option is considered an independent project and why?Which investment options are mutually exclusive and why?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
- Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage