ch19 sample questions

If the company decided to sell the new product at price of D.Cr. 8.20, that means the full fixed expense of 1.20 is covered and the company will make high profit. However, the selling price of D.Cr. 8.20 is very high and under this price the company will sell the new product at a lower volume than what the company planned sale volume in the budget and that will affect the company in the market as a strong competitor in the food manufacturing. According to the case, the company sales volume drop to 30 tons when the product was sold at the price of D.Cr. 8.2. Thus, my recommendation are as follows:

C) a norm governing everyday social behavior, the violation of which raises comparatively little concern.

Another concern identified, is the utilities expense budget for utilities in Year 9 which is $150,000. This amount is identified as a fixed amount and is unrelated to actually production activities and manufacturing efficiency. Considering that production levels and activity fluctuates throughout the year, the budget for utilities should be a variable item. An example; from Year 7 to Year 8, the utilities expenses increase by $15,000 and with this detection, ways to reduce this expense should be investigate. Another concern is a duplicated line item under the Selling, General, and Administrative Budget for Utilities and Utilities and Services. Another issue for concern, Total Variable Cost was reported to be lower; however was not enough for the lack of sales combined with an increase in advertising and transportation which resulted in an overall negative result. The low Net Sales directly impacted the Contribution Margin which decreased by $49,397. Overall, these concerns indicate the need for a flexible budget with variance analysis.

From the first page of the case we have an estimate of $11 million cost of lost sales and backorders and $10 million associated with having too much of the wrong inventory. These costs are stated as being a conservative estimate.

3. Post the file from the same page where you accessed this Assignment, using the

Unit Break-even Volume = Total Fixed Costs/Contribution per unit = $525,000 - $6.40 = 82,031.25units

In line with our objective, we proposed two different models both resulted in reducing the total cost. Proposed scenarios are:

With failure costs some of the costs would be equipment break downs and spills. Our equipment costs 3 million dollars so we don’t want to replace it for at least 10 years. The routine maintenance for the equipment is $500,000 a year. The cost for the spills is a total of $120,000 a year. That includes $50,000 for the training classes on spill prevention and $70,000 for the salary of two new spill prevention workers.

(10): Correction Cost - In the event that the prevention stage was skipped correction costs occur to fix the record this involves scrubbing and deduping, costing the business $10

The average of fraction defective is merely a number which cannot tell us what to do with it even when we get it. Thus SPC is more accurate and systematic to analyze the process of customer service operation.

It is obvious that repairing process causes some costs. They can be considered as sunk costs.

The project for roof recoating costs X to purchase (capital) and ongoing maintenance (expense) is added until the roof has reached its service life. Example: Coating Roof Section: 17,000 s/f Capital Purchase $24,000, life time expenses $ 4,000.00. Final life time cost $ 28,000.00, service life 14 years the is $2,000.00 per year. If you take a lower bid of $21,000.00 even when life time expenses remain at $ 4,000.00, if the alternate service life is reduced to 10 years your annual cost increases to $ 2,500.00

The agency is a doctor’s office, which is one of the medical offices connected to a hospital called Greenville Health Systems (GHS). The purpose of this small profited organization is to basically now how to budget its sales, production, finances, overheads, personnel, and the master portion of the business. The sales portion of this includes medical equipment that is being used to take care of their patients, medication. The production part deals with the time items are being ordered till the time they are shipped in. This also includes the time patients come into the office, and till the time they be leave. The financial portion of the agency includes all of the office’s equipment. The overhead budget includes the overall budgeting of

If the external factors are beyond the company’s control can cause instability in raw materials prices, deterioration in operating margins, product volumes and prices and demand for its products. Also, these external constraints can lead to the magnification of economic cycle’s impact and the output of the firms operations. They include technological innovations, general economic conditions, severe weather and natural disasters, credit worthiness of customers or currency fluctuations. Since 2007, the company closed a PVC pipe plant component due to a high cost of materials and lack of demand for the product. Outages may last for several quarters or longer and cause the firm to incur costs attributable to maintenances and to restart the facilities. If the company forecasts increment in raw materials costs and low demand for the products in the future may cause a reduction in operating rates and idle facilities.

The next major issue I wish to address is the proposed decrease in depreciation expense. In the projected income statement, depreciations are reduced down from $50,000 to $25,000 by increasing