Managerial Accounting

The three scenarios illustrated above clearly shows that the investment in the new machine creates greater value to the company, unless there should be some unexpected turnout in sales. By acquiring the Vulcan Mold-Maker machine Fonderia di Torino S.p.A will be able to replace labor intensive required semi-automated machines with automated machines, thus reducing medical claims. The company will also benefit from higher levels of product quality and lower scrap rates. Labor costs will be reduced by almost 298,334.4

c. If we buy machine 3 because it's a bottleneck, without changing anything else, utilization for station 3 will become less which will cause less queue, less waiting time, less lead time, no or less penalty, more revenue.

10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

3. How many operations could the hospital perform per day before running out of bed capacity? How well would the new resources be utilized relative to the current operations? Why?

To help mitigate the immediate supply crisis, Steve arranged for the Italian machinery tech- nicians to fine-tune the existing machines and increase capacity by 10 percent. However, Steve was not sure how long the equipment would be able to operate under this type of production schedule.

The company is currently using a CNC machine for orders for equal or greater than 140 boards due to capacity of a CNC machine; however, they would be able to process all orders with CNC machines if they add one more machine.

c. What is the opportunity cost of increasing the annual output of potatoes from 600 to 800 pounds?

The correlation between the tool wear and cutting forces before the first second of machining will be discussed in section 4-5.

The quarterly leasing cost was $120,000 and $100,000, respectively. To iterate, the reason for opening only two locations was to position the company’s products in front of a significant number of consumers with metropolitan appetites and disposable incomes to support computer purchases.

5. How would you go about deciding the appropriate batch size for the Stonehaven factory? What factors would you consider? How do they interrelate? (You may wish to do some calculations, but concentrate on thinking conceptually.)

Estimated machinery life: 3 years (after which there will be zero value for the equipment and no further cost savings)

investigation has revealed that $211,000 of the fixed manufacturing expenses and $122,000 of the fixed selling

ML had developed a policy of selling manual machines and renting automatic machines. Manual machines did not cost much, did not require service, and could be modified to attach different fasteners inexpensively. Automatic machines were rented on an annual basis because they would have been more expensive to sell and it provided annual income to ML. However, about 700 of the rented machines were returned each year. During the time that machines were in inventory, ML would modify the machines to attach different fasteners. This was expensive with an average cost per modification of $2000. If all 700 machines were modified during a given year this would have cost $1.4 million per year. It was also industry practice to provide preventative maintenance and

Andres was forced to import product from French division as he ran out of capacity several times due to new machines performing inadequately. This added an overhead expense of approximately 2147 (Additional maintenance costs + Transfer costs)

Linda Metzler the production planning manager is the main responder in this case, she has to come up with another optimal alternative that will have to be submitted to the plant’s General Manager. The plan has to be approved by the general manager for roll out starting next year.