MANAGERIAL ACCOUNTING FOR MANAGERS
5th Edition
ISBN: 9781264196456
Author: Noreen
Publisher: MCG
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Chapter 6A, Problem 6A.11P
1.
To determine
Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.
To calculate: The maximum amount the company will be willing to pay To S manufacturer for machine.
2.
To determine
Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.
To compute: The price of the machine on the return on investment, and prepare a graph showing the effect of change in price on ROI
3.
To determine
Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.
The some of the ideas for introducing the S machine
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Students have asked these similar questions
Question 1
The normal price per unit is $120
Total cost per unit $90 (40% fixed cost)
A customer from Saudi Arabia would like to import 2500 units to sell in Saudi Arabia for a price $80 per unit.
The maximum capacity is 10,000 units
The local demand is 7000 units.
Do you think the company should accept this special offer? Justify your answer.
If the customer seeks to receive the goods in Saudi Arabia, and the cost of shipping is $15 per unit,
Do you think the company should accept the offer in this case?
Question 1
BARTELS Limited expects to sell 8,200 mobile phones this
year. The cost of placing an order from its supplier is
GH¢200. Each phone costs GH¢600, and carrying costs are
20% of the purchase price. Currently, they order 250 mobile
phones at a time. They are however not sure if this is efficient.
You have been tasked to help.
a. Provide them with an optimal order quantity (round to the
nearest whole)
b. What savings will accrue to BARTELS Ltd as a result of
the switch?
c. Based on the EOQ, how many order cycles will BARTELS
have for the year?
d. If daily demand is 20 mobile phones with a lead time of 2
days and safety stock of 20 phones, what is the Reorder
point for Cool Ltd?
10
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It costs Concord Company $26 per unit ($18 variable and $8 fixed)
to produce its product, which normally sells for $38 per unit. A
foreign wholesaler offers to purchase 6400 units at $21 each.
Concord would incur special shipping costs of $2 per unit if the
order were accepted. Concord has sufficient unused capacity to
produce the 6400 units. If the special order is accepted, what will
be the effect on net income?
O $6400 decrease
O $19200 increase
O $115200 increase
O $6400 increase
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- Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell Moore, controller for Global Reach, has been reading about the advantages of foreign trade zones. He wonders if locating in one would be of benefit to his company, which imports about 90 percent of its merchandise (e.g., chess sets from the Philippines, jewelry from Thailand, pottery from Mexico, etc.). Darnell estimates that the new warehouse will store imported merchandise costing about 16.78 million per year. Inventory shrinkage at the warehouse (due to breakage and mishandling) is about 8 percent of the total. The average tariff rate on these imports is 5.5 percent. Required: 1. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in tariffs? Why? (Round your answer to the nearest dollar.) 2. Suppose that, on average, the merchandise stays in a Global Reach warehouse for nine months before shipment to retailers. Carrying cost for Global Reach is 6 percent per year. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.) 3. Suppose that the shifting economic situation leads to a new tariff rate of 13 percent, and a new carrying cost of 6.5 percent per year. To combat these increases, Global Reach has instituted a total quality program emphasizing reducing shrinkage. The new shrinkage rate is 7 percent. Given this new information, if Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.)arrow_forwardStructuring a Special-Order Problem The Millenium Company has been approached by a new customer with an offer to purchase 10,000 units of its model F80 at a price of $4.10 each. The new customer is geographically separated from the company's other customers, and existing sales would not be affected. Millenium normally produces 75,000 units of F80 per year but only plans to produce and sell 60,000 in the coming year. The normal sales price is $12 per unit. Unit cost information for the normal level of activity is as follows: Direct materials $1.75 Direct labor 2.50 Variable overhead 1.50 Fixed overhead 3.25 Total $9.00 Fixed overhead will not be affected by whether or not the special order is accepted. Required: 1. Should the company accept or reject the special order? 2. By how much will operating income increase or decrease if the order is accepted? byarrow_forwardJarred Manufacturing has a valve division that manufactures and sells a standard valve.Capacity in Units 100 000 unitsSelling Price to external customers R300Variable Costs per unit R160Fixed Costs (based on capacity) R90 per unitThe company has a Pump division that could use this valve in one of its pumps. The pump division is currently purchasing 10 000 valves per year from a German supplier at a cost of R290 per valve. Required;4.1 Assuming that the Valve Division has ample idle capacity to handle all of the Pump Division needs. What is the acceptable range, if any, for the transfer price between the two divisions? 4.2 Assuming that the Valve Division is selling all of its valves that it can produce to external customers. What is the acceptable range, if any, for the transfer price between the two divisions? 4.3 Assuming that the Valve Division is selling all of its valves that it can produce to external customers and that R30 in variable costs can be avoided on inter-division…arrow_forward
- Question Feip Suppose that a manufacturer can produce a part for $9.00 with a fixed cost of $5,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $11.00, which includes transportation. a. If the anticipated production volume is 1,500 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision? a. The total cost of manufacturing is $ (Simplify your answer.) PI ry sit nas mu Enter your answer in the answer box and then click Check Answer. parts remaining Check Answer Clear All Type here to searcharrow_forward3arrow_forwardProblems Problem 1 (Accept or Reject an Order) As a result of an expansion program, Marianas, Inc., has excess capacity of 40,000 machine hours, which is expected to be absorbed by the domestic market in a few months. The company has received inquiries from two companies located in another country. One offers to buy 21,000 units of Product A at P1.20 per unit; the second offers to buy 30,000 units of Product B at P1.40 per unit. Marianas, Inc. can accept only one of these tv/o offers. The standard cost for these two products is as follows: PRODUCT B PRODUCT A P0.50 Materials PO.70 Labor 0.20 0.24 Factory overhead Total standard cost 0.40 P1.10 0.56 P1.50 Factory overhead is applied on a machine-hour basis at P11.20 per hour, 75% factory overhead is estimated to be fixed. No marketing and administrative expenses would be applicable to either order. Transportation charges are to be paid by the buyer. Required: Which order should be accepted?arrow_forward
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