2016 2017 $ 8.00 $ 7.00 Average cost per new contact Travel cost per mile Preparing and filing cost per new system 0.55 0.65 275.00 250.00 After experiencing high costs in 2016, SES used value engineering to reduce the cost of selling solar heat- ing systems. Managers at SES want to evaluate whether value engineering has succeeded in reducing the selling cost per sale by the targeted 8% in 2017. Actual results for 2016 and 2017 for SES are: Actual Results for 2016 Actual Results for 2017 Sales of heating systems Number of new contacts 175 188 225 240 Miles driven 1,900 1,750 1. Calculate the cost per sale in 2016. 2. Calculate the cost per sale in 2017. 3. Did SES achieve the target cost per sale in 2017? Explain. 4. What challenges might managers at SES encounter in achieving the target cost and how might they overcome these challenges? Required

2016 2017 $ 8.00 $ 7.00 Average cost per new contact Travel cost per mile Preparing and filing cost per new system 0.55 0.65 275.00 250.00 After experiencing high costs in 2016, SES used value engineering to reduce the cost of selling solar heat- ing systems. Managers at SES want to evaluate whether value engineering has succeeded in reducing the selling cost per sale by the targeted 8% in 2017. Actual results for 2016 and 2017 for SES are: Actual Results for 2016 Actual Results for 2017 Sales of heating systems Number of new contacts 175 188 225 240 Miles driven 1,900 1,750 1. Calculate the cost per sale in 2016. 2. Calculate the cost per sale in 2017. 3. Did SES achieve the target cost per sale in 2017? Explain. 4. What challenges might managers at SES encounter in achieving the target cost and how might they overcome these challenges? Required

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 1MC: Financial and Nonfinancial Aspects of Changing to JIT IntelliTalk manufactures smart phones. It is...

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Financial and Nonfinancial Aspects of Changing to JIT IntelliTalk manufactures smart phones. It is considering the implementation of a JIT system. Costs to reconfigure the production line will amount to 200,000 annually. Estimated benefits from the change to JIT are as follows: The quality advantages of JIT should reduce current rework cost of 300,000 by 25%. Materials storage, handling, and insurance costs of 250,000 would be reduced by an estimated 40%. Average inventory is expected to decline by 300,000 units, and the carrying cost per unit is .35. Required: 1. What is the estimated financial advantage or disadvantage of changing to a JIT system? 2. Are there any nonfinancial advantages or disadvantages of changing to a JIT system?
C.V.P.Analysis Darius Manufacturing Company manufactures and sells parts for various musical gadgets. The business earned Operating Income of $420,000 in 2018, when selling price per unit was $200 and the president of Darius is under pressure to increase operating income in 2019 and is therefore considering the implementation of strategies geared at increasing revenues. Data for variable cost per unit and total fixed costs were asfollows:Variable expenses per unit: Direct Material $20Direct Labour $50Variable Manufacturing Overhead $10 Fixed expenses: Fixed Manufacturing Overhead $125,000Fixed Selling Costs $75,000Fixed Administrative Costs $100,000 You have just begun your internship at the company. The financial controller, Dave Miller, has indicated that the business is considering paying a commission to its sales team as part of the sales expansion effort, which should result in an increase in sales revenue. The head of the marketing department has indicated that the effort of the…
Q18. A process control manager is considering two robots to improve materials-handling capacity in the production of rigid shaft couplings that make dissimilar drive components. Robot X has a first cost of $76,000, an annual M&O cost of $31,000, and $42,000 salvage value, and it will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, and $47,000 salvage value, and it will increase revenues by $121,000 per year. The company’s MARR is 46% per year, and it uses a 3-year study period for economic evaluations. Calculate the incremental ROR, and identify the robot the manager should select. The incremental ROR is The manager should select robot ?
pleasehelp32 Fone Zone Corporation manufactures telephones. Recently, the company produced a batch of 640 defective telephones at a cost of $9,400. Fone Zone can sell these telephones as scrap for $10 each. It can also rework the entire batch at a cost of $6,900, after which the telephones could be sold for $21 per unit. If Fone Zone reworks the defective telephones, by how much will its operating income change? Multiple Choice Increase by $7,040 Increase by $6,540 Decrease by $2,860 Decrease by $6,540
E8.8 (LO 3), AN Antonio is evaluating some of last year’s manufacturing costs for his business, Work It Out, which creates custom-fit exercise equipment for high-end clients. He is trying to strengthen his own analytical skills by looking at some of the total cost amounts and working backward to make sure he can find the detailed amounts that comprised these totals. Last year’s manufacturing costs are as follows. Total manufacturing costs $580,000 Total applied MOH (based on an MOH rate of $1.80/DL dollar) 270,000 Total cost of goods completed 630,000 Beginning balance in WIP Inventory 56,000 Required a. How much direct labor cost was incurred last year? b. What was the cost of direct materials used? c. What was the ending balance in WIP Inventory last year? d. If FG Inventory had no ending balance but Cost of Goods Sold was $675,000, what was the beginning balance in FG Inventory last year? e. Given the company’s goal to generate a 65% gross margin on these products, how much revenue…
Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: McGraw-Hill Education. 16th edition. Question #8: Air Purifier Inc. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $2,450,000, but 15% of this value is represented by depreciation. Its contribution margin (price minus variable costs) for each unit is $40. How many units does the firm need to sell to reach the cash break-even point?
Ratliff Appliances Company makes a household appliance with model number RM16. The goal for 2020 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of RM16 units that can be produced. The industry market size for appliances increased 10% from 2019 to 2020. The following additional data are available for 2019 and 2020: 2019 2020 Units Produced & Sold 33,000 37,950 Selling Price $ 360 $ 345 Direct Materials (square feet) 82,500 87,000 Direct Material Costs per square foot $ 31 $ 33 Manufacturing capacity (units) 41,250 39,850 Total Conversion Costs $ 866,250 $ 797,000 Conversion Costs per unit of capacity $ 21 $ 20 Ignoring the market growth, but considering your answer to question (a), how much of Ratliff Co’s change in income from 2019 to 2020 is due to a cost leadership strategy?
Choose the correct letter of answer Patience company is considering a proposal to replace an existing machine used for the manufacture of Product A. The new machine is expected to increase annual fixed costs by P120,000; however, variable costs should decrease by 20% because of a reduction in direct labor hours and more efficient usage of direct materials. Before this change was under consideration, Patience had budgeted Product A sales and cost for 2021 as follows: (1) Sales, P2,000,000; (b) variable costs, 70% of sales; and (c) fixed costs, P400,000.o Assuming that Patience implemented the above proposal by January 1, 2021, what would be the increase in budgeted operating profit for Product A for 2021? a. P160,000b. 20%c. 47% d. none of the above
3. Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here. Current Units sold 216,000 Sales price per unit $2.15 Variable cost per unit $1.75 Contribution margin per unit $0.40 Fixed costs $56,000 Break-even(in unit) $140,000 Break-even(in dollars) $301,000 Sales $464,400 Variable costs $378,000 Contribution margin $86,400 Fixed costs $56,000 Net Income (loss) $30,400 The following names are to be considered when completing this problem: Operating…
CVP computations. Garrett Manufacturing sold 410,000 units of its product for $68 per unit in 2017.Variable cost per unit is $60, and total fixed costs are $1,640,000.1. Calculate (a) contribution margin and (b) operating income.2. Garrett’s current manufacturing process is labor intensive. Kate Schoenen, Garrett’s production manager,has proposed investing in state-of-the-art manufacturing equipment, which will increase the annualfixed costs to $5,330,000. The variable costs are expected to decrease to $54 per unit. Garrett expectsto maintain the same sales volume and selling price next year. How would acceptance of Schoenen’sproposal affect your answers to (a) and (b) in requirement 1?3. Should Garrett accept Schoenen’s proposal? Explain.
Consider the following cost and pricing data of ABC Corp. on its Product X:Price: P120.00.per unitProfit Contribution: P90.00Proposed additional Cost: P3 per unit (for quality improvement)Current Profits: P2.4 millionSales: 100,000 units. A. Assuming that average variable costs are constant at all output levels, findABC Corp.’s total cost function before the proposed change.B. Calculate the total cost function if the quality improvement is implemented. UNANSWERED SUB-PARTSC. Calculate ABC Corp.’s break-even output before and after the change, assuming it cannot increase its price.D. Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here. The following names are to be used when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss Revised Fixed costs = 56000 + 18250 = $74250 Variable cost per unit = 1.75 - 0.15 = $1.6 per unit Contribution margin per unit = Sales price per unit - Variable cost per unit = 2.15 - 1.6 = $0.55 per unit Breakeven point in units = Fixed costs/ Breakeven point in units = 74250/0.55 = 135000 units Breakeven sales revenue = 135000*2.15 = $290,250 1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown…