Chapter 5.S, Problem 14P

a)

Summary Introduction

To determine: The revenue retrieval for GF.

Introduction: The revenue is the income obtained from the sale of products and services; it can also refer to any assets or capital related with the main operations of the firm before any expenses or costs are deducted.

Answer to Problem 14P

The revenue retrieval amount for GF Deluxe is $4.53.

Explanation of Solution

Given information:

GF Deluxe:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.27	$4.78	$1.05	$0.85
Battery	$0.00	$3.68	$6.18	$3.05
Motor housing	$3.93	$2.95	$2.05	$1.25
Trimmer head	$1.25	$0.75	$1.00	$0.65

PM:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.18	$3.95	$1.15	$0.65
Battery	$0.00	$3.68	$4.15	$3.00
Motor housing	$4.05	$3.45	$2.45	$1.90
Trimmer head	$1.05	$0.85	$1.10	$0.75

Formula:

$\text{Revenue retrieval}=\left[\begin{array}{l}\text{Total resale revenue}+\text{Total recycling revenue}-\\ \text{Total processing cost}-\text{Total disposal cost}\end{array}\right]$

Calculate the revenue retrieval amount for GF Deluxe:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.27	$4.78	$1.05	$0.85
Battery	$0.00	$3.68	$6.18	$3.05
Motor housing	$3.93	$2.95	$2.05	$1.25
Trimmer head	$1.25	$0.75	$1.00	$0.65
Total	$8.45	$12.16	$10.28	$5.80
Total retrieval				$4.53

Table 1

$\begin{array}{c}\text{Revenue retrieval amount}=\$8.45+\$12.16-\$10.28-\$5.80\\ =\$4.53\end{array}$

The revenue retrieval amount is calculated by subtracting all the costs involved from the resale revenue obtained which is $4.53.

Hence, the revenue retrieval amount for GF Deluxe is $$4.53.

b)

Summary Introduction

To determine: The revenue retrieval for PM.

Answer to Problem 14P

The revenue retrieval amount for PM is $5.06.

Explanation of Solution

Given information:

GF Deluxe:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.27	$4.78	$1.05	$0.85
Battery	$0.00	$3.68	$6.18	$3.05
Motor housing	$3.93	$2.95	$2.05	$1.25
Trimmer head	$1.25	$0.75	$1.00	$0.65

PM:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.18	$3.95	$1.15	$0.65
Battery	$0.00	$3.68	$4.15	$3.00
Motor housing	$4.05	$3.45	$2.45	$1.90
Trimmer head	$1.05	$0.85	$1.10	$0.75

Formula:

$\text{Revenue retrieval}=\left[\begin{array}{l}\text{Total resale revenue}+\text{Total recycling revenue}-\\ \text{Total processing cost}-\text{Total disposal cost}\end{array}\right]$

Calculate the revenue retrieval amount for PM:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.18	$3.95	$1.15	$0.65
Battery	$0.00	$3.68	$4.15	$3.00
Motor housing	$4.05	$3.45	$2.45	$1.90
Trimmer head	$1.05	$0.85	$1.10	$0.75
Total	$8.28	$11.93	$8.85	$6.30
Total retrieval				$5.06

Table 2

$\begin{array}{c}\text{Revenue retrieval amount}=\$8.28+\$11.93-\$8.85-\$6.30\\ =\$5.06\end{array}$

The revenue retrieval amount is calculated by subtracting all the costs involved from the resale revenue obtained which is $5.06.

Hence, the revenue retrieval amount for PM is $5.06.

c)

Summary Introduction

To determine: The better model in terms of design.

Answer to Problem 14P

The better model in terms of design is PM.

Explanation of Solution

Given information:

GF Deluxe:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.27	$4.78	$1.05	$0.85
Battery	$0.00	$3.68	$6.18	$3.05
Motor housing	$3.93	$2.95	$2.05	$1.25
Trimmer head	$1.25	$0.75	$1.00	$0.65

PM:

Part	Resale revenue per unit	Recycling revenue per unit	Processing cost per unit	Disposal cost per unit
Metal frame	$3.18	$3.95	$1.15	$0.65
Battery	$0.00	$3.68	$4.15	$3.00
Motor housing	$4.05	$3.45	$2.45	$1.90
Trimmer head	$1.05	$0.85	$1.10	$0.75

From Table 1 and 2, it can be inferred that PM has better design alternatives in terms of revenue retrieval because it has the highest revenue retrieval.

Hence, the PM is the better design alternative because it has a higher revenue retrieval opportunity.