ACCT 5302 Exam 1 Multiple Choice Review Questions And Answers Rev

To calculate optimal pricing I used MC outlined in the case as based on volume of drives produced weekly. Fixed costs of plant and equipment were not included in this analysis although are later evaluated for breakeven time frame.

According to our analysis, So , c) is a betterthe optimal choice whichchoice, which confirmed our aggressive machine buying strategy since Day 135. And on Day 149, and Day 170, we immediately bought machine for station 2 and 1 again when the stationsit becomes bottle neck or when lead time is more than 0.28 which caused revenue decreased to $1,200.

When making a purchase to improve on many areas of operations there are always factors to take into consideration. There will be a great amount of capital expenditure for this equipment; however the potential for higher return on investment is remarkable. The initial cost of purchasing the MAGNETOM is approximately $ 1 million. There will be an additional cost of $500,000 to operate and maintain the machine. These costs will be reimbursed within the first eight months of extensive utilization if the all marketing for the machine is on point. Since we are currently paying a technician to operate our out of date machinery, there is no reason why this prediction cannot become reality. There will also be an offset of income inherited by the lack of errors made by the technicians after they have trained for the new machine . ("Magnetom espree -," 2013)

There are many trade-offs for each of the decisions that a company makes within all three types of these cost types when quality consideration is used. If the company decides to put more time into training employees properly on operating machines and

The current machine is more than adequate for what we do. I know at some point maintenance will price us into a new machine and Peter has already sent us an estimate.

In order to meet customer demands for higher product quality, to comply with federally-mandated environmental regulations, and to reduce production costs, HCC must spend $2,000,000 within the next three years to upgrade equipment. The upgrade is expected to result in production efficiencies that will lower material and labor costs by reducing defective products, process waste, in-process inventory, and production man-hours through simplified work processes. It has been over a decade since significant modifications were made to the production facilities. Those changes were mostly technical in nature and did not substantially alter work processes or reduce overall employment. The average productivity gain in the industry for the past five years has been 3% per year. Financing for the loan to purchase the equipment

9. Suppose that Whirlpool finds a way to reduce the costs of the project by 5%. Please change the cost factor in cell G31 to 95%. What is the value of the option now?

The $320,000, on the other hand, is a fixed cost associated with the proposed addition.

Data indicates that Model C210 has a higher contribution margin per unit of the constraint. Therefore it is recommended that until the constraints in coating and sharpening are removed, production should concentrate its limited resources on production of the more profitable model. The Model C210 contributes $1250 per hour compared to $537.50 per hour given the constraint in the coating and sharpening stage.

The equipment is normally used to manufacture prototype boards, so its full capacity is never used. Since this new circuit board will not be manufactured in very large quantities, the machine will suffice, although some additional “add-ons” as well as supplies will be needed to produce this particular board. There is a 20% chance that equipment failure may cause a significant problem and, if it does, the impact is estimated at $50,000.

Based on the previous two tables allocating machine depreciation based on direct labor hours can give the company a false cost on how much it cost to produce each unit of a particular product. Pumps are being allocated $19,350 ($175,600-$156,250) too much machine depreciation. With the company producing 12,500 pumps that’s a per unit over charge of $1.55. While this is only showing the differences in

If management should focus on quantity maximization, it should produce 106 D1-910 printers and 27 D1-950s. This strategy would create a maximum of 133 total units and would effectively balance the workload, but it wouldn’t maximize profitability.

A third alternative for Madison Industries is to sell the machine as is for price of $ 40,000. However, the potential buyer of the unmodified machine does not want it for 60 days. This buyer has offered a $7,000 down payment, with the remainder due upon delivery. No commission will be paid on this

With the plant size of 8 we were able to produce more production with less marginal cost. But to keep the production near to 50% we reduced our production to 4250 from 4700. Also, during the second quarter the GDP was still growing and the demand was shifting to the right, so we could increase our product. As our marginal cost was higher than marginal revenue so we decided to increase plant size by another 2 units to decrease the cost in next quarter.

d.) There is an additional cost involved in producing additional units from Hi-Valu the $5,000 additional cost plus the asset related cost.