A company has an inventory of 1,000 assorted parts for a line of missiles that has been discontinued. The inventory cost is $80,000. The parts can be either (a) remachined at total additional costs of $30,000 and then sold for $35,000, or (b) sold as scrap for $2,000. Which action should be take

A company has an inventory of 1,000 assorted parts for a line of missiles that has been discontinued. The inventory cost is $80,000. The parts can be either (a) remachined at total additional costs of $30,000 and then sold for $35,000, or (b) sold as scrap for $2,000. Which action should be take

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter21: Variable Costing For Management analysis

Section: Chapter Questions

Problem 4CMA: Bethany Company has just completed the first month of producing a new product but has not yet...

See similar textbooks

Related questions

Q: Annual cost of manufactured goods (manufacturing cost). b) Cost of items sold total year

A: Cost of goods manufactured is the original cost of of manufacturing the goods. It includes all the…

Q: Madison Ironworks made 400 defective units last month. Fortunately, the units were identified as…

A: Relevant cost : It is a cost that is relevant to a particular decision and differs between…

Q: Kwon Digital Components Company assembles circuit boards by using a manually operated machine to…

Q: Remerowski Corporation Inc. asks you to estim the cost to purchase a new piece of production equip-…

A: Old equipment: New equipment:

Q: Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to…

A: (a)

Q: the lily corporation has 8,000 obsolate units of a product that are carried in inventory at a…

A: Additional revenue = Sale after remachined - sale value from scrap = $72000 - 28000 = $44,000

Q: Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of…

A: Revenue is the funds generated from common commerce operations, computed as the average sales price…

Q: Varto Company has 12,400 units of its sole product in inventory that it produced last year at a cost…

A: It is to be noted that the last of th inventory incurred last year is a sunk cost and not relevant…

Q: A commercial company bought 250 units of a certain material at a price of 50,000 dinars per unit,…

A: calculation the cost of the material purchased Particulars Amounts Purchase price of material…

Q: Briquette Corporation has in stock 35,800 kilograms of material L that it bought five years ago for…

A: The primary motive of each and every business entity is to increase the profit, there are two ways…

Q: Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss…

A: Given the information, the analysis is shown below. An alternative with lesser loss should be…

Q: Remerowski Corporation Inc. asks you to estimate the cost to purchase a new piece of production…

A: It is given that :Original Equipment:cost of similar old equipment- $10,000 Capacity- 2000 units…

Q: Briquette Corporation has in stock 35,800 kilograms of material L that it bought five years ago for…

A: Minimum acceptable price means the price that the company should atleast get on exchanging some…

Q: At the beginning of the year, Young Company bought machinery, shelving, and a forklift. The…

A: Computation of total cost of machine = initial cost + overhauling cost + installation cost =…

Q: Fleet Sports purchased a production machine with a cost of $180,000 at the beginning of 2019.…

A: Since we answer up to 3 sub-parts, we'll answer the first 3. Please resubmit the question and…

Q: Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of…

A: The operating income refers to the difference between revenues and operating costs. The operating…

Q: On January 1, 20x1, COCO Co. acquired a piece of equipment with an estimated useful life of 4 years…

A: “Since you have posted a many questions, we will solve first question for you. To get the remaining…

Q: If 40,000 units were produced in 20X1 and 60,000 were produced in 20X2, what amount of accumulated…

A: The correct option is C. $150,000

Q: A company must decide between scrapping or reworking units that do not pass inspection. The company…

A: calculation of scarp or rework analysis are as follows

Q: Disposal of assets. Answer the following questions. A company has an inventory of 1,300 assorted…

A: 1.Identify the action which is more profitable.

Q: The Tolar Company has 400 obsolete desk calculators that are carried in inventory at a total…

A: Opportunity costs = Revenue from sale of upgraded calculator - Additional costs

Q: Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of…

A: Given, information regarding Sugar Sweet (SS) Company that produces and sells 7,000 specialty…

Q: A company purchased a van at a cost of $42,000 and expects it can be sold for $6,000 after 120,000…

A: Given that, cost of the van = $42000 Residual value of the van = $6000 Service time of the van =…

Q: Jackson Inc. disposes of other companies’ toxic waste. Currently, Jackson loads the waste by…

A: Given is: Cost of Machine = $200,000 Reduction in Labour Cost = $5 per load Loads in a year = 10000

Q: Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project…

A: Given in the question: Project began in 2019 New product will be introduced for sale beginning in…

Q: Allen International, Inc., manufactures chemicals. It needs to acquire a new piece of production…

A: The after-tax analysis is the analysis where we need to calculate the after-tax cost of a company…

Q: Black Widow Company had the following costs for 2020: Raw materials P700,000 Direct labor…

A: The question is multiple choice question Required Choose the Correct Option

Q: Vaughn, Inc. has 9700 obsolete calculators, which are carried in inventory at a cost of $19900. If…

A: Inventory - Inventory refers to all the items acquired by the organisation with the motive of…

Q: Answer the following questions. 1. A company has an inventory of 1,150 assorted parts for a line of…

A: To determine which of the proposed action may be beneficial for the company, future benefits shall…

Q: A company must decide between scrapping or reworking units that do not pass inspection. The company…

A: Incremental income = Income after Rework - Income from Scrap where, Income after Rework = Revenue…

Q: . Determine an order quantity that will minimize total cost. What is the Total Cost at the feasible…

A: Economic order quantity is the ideal order quantity a company should purchase to minimize inventory…

Q: Boom has damaged materials of 2,000 units with cost of 200,000. If rework, additional cost is 20,000…

A: Cost of goods sold is the total of all direct Cost of producing the goods sold by a company like…

Q: CariTech (CT) Company produces and sells 7,000 Special purpose chairs per year at a selling price of…

A: The question is based on the concept of Financial Management.

Q: . The relevant cost for IT Company to consider in making its decision is

A: For the purpose of decision making past costs i.e the cost which is already incurred is not…

Q: Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of…

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: CariTech (CT) Company produces and sells 7,000 Special purpose chairs per year at a selling price…

A: Here,

Q: Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to…

A: sales and annual costs are multiplied with 5 years in the question a below. sales- costs = Income…

Q: The trial balance of Magic Shop Company showed inventories of P164,000. The inventories include some…

A: Cost of goods produced: It is the cost incurred by the company in producing the goods. It includes…

Q: Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of…

A: Comment-Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of…

A: Revenues- Revenue is the funds generated from common commerce operations, computed as the average…

Q: Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of…

A: The operating income refers to the difference between revenues and operating costs. The operating…

Q: On January 1, 1990, Alamo Steel Company purchased three used delivery trucks at a total cost of…

A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…

Q: A truck, costing $102,500 and uninsured, is wrecked its first day in use. It can be either (a)…

A: Shrinkage: The cost of difference between the recorded inventory value and physical count of…

Q: Ellison Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in…

A: Calculate present value of each vendors:

Q: 6. The Lantern Corporation has 1,000 obsolete lanterns that are carried in inventory at a…

A: Carrying Cost are the part of total value of inventory. It is related to the expenses incurred by…

Q: Niasha Stores recently imported an item of plant from Grenadines Plants Ltd. The following…

A: As per IAS 16, the cost of an item of property, plant and equipment includes: (a) its purchase…

Question

A company has an inventory of 1,000 assorted parts for a line of missiles that has
been discontinued. The inventory cost is $80,000.

The parts can be either (a)
remachined at total additional costs of $30,000 and then sold for $35,000, or (b)
sold as scrap for $2,000. Which action should be take

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Property, Plant and Equipment

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

For each of the following independent situations, calculate the missing values: 1. The Belen plant purchased 78,300 of direct materials during June. Beginning direct materials inventory was 2,500, and direct materials used in production were 73,500. What is ending direct materials inventory? 2. Forster Company produced 14,000 units at an average cost of 5.90 each. The beginning inventory of finished goods was 3,422. (The average unit cost was 5.90.) Forster sold 14,120 units. How many units remain in ending finished goods inventory? 3. Beginning work in process (WIP) was 116,000, and ending WIP was 117,300. If total manufacturing costs were 349,000, what was the cost of goods manufactured? 4. If the conversion cost is 84 per unit, the prime cost is 55, and the manufacturing cost per unit is 105, what is the direct materials cost per unit? 5. Total manufacturing costs for August were 412,000. Prime cost was 64,000, and beginning WIP was 76,000. The cost of goods manufactured was 434,000. Calculate the cost of overhead for August and the cost of ending WIP.
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Walloon Company produced 150 defective units last month at a unit manufacturing cost of 30. The defective units were discovered before leaving the plant. Walloon can sell them as is for 20 or can rework them at a cost of 15 and sell them at the regular price of 50. What is the total relevant cost of reworking the defective units? a. 2,250 b. 3,000 c. 4,500 d. 6,750
Trifecta Distributors has decided to discontinue manufacturing its X Plus model. Currently, the company has 4,600 partially completed X Plus models on hand. The government has put a recall on a particular part in the X Plus model, so each base model must now be reworked to accommodate the style of the new part. The company has spent $110 per unit to manufacture these X Plus models to their current state. Reworking each X Plus model will cost $20 for materials and $20 for direct labor. In addition, $7 of variable overhead and $32 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be allocated per unit. Il Trifecta completes the X Plus models, it can sell them for $160 per unit. On the other hand, another manufacturer is interested in purchasing the partially completed units for $104 each and converting them into Z Plus models. Prepare a differential analysis per unit to determine if Trifecta should complete the X Plus models or sell them in their current state.
Bethany Company has just completed the first month of producing a new product but has not yet shipped any of this product. The product incurred variable manufacturing costs of 5,000,000, fixed manufacturing costs of 2,000,000, variable marketing costs of 1,000,000, and fixed marketing costs of 3,000,000. Under the variable costing concept, the inventory value of the new product would be: a. 5,000,000. b. 6,000,000. c. 8,000,000. d. 11,000,000.
A company has an inventory of 1,300 assorted parts for a line of missiles that has been discontinued. The inventory cost is $71,000. The parts can be either (a) remachined at total additional costs of $27,500 and then sold for $31,500 or (b) sold as scrap for $6,000. Which action is more profitable? Show your calculations.
a company has an inventory of 1100 assorted parts for a line of missiles that has been discontinued. The inventory cost is $78000. The parts can be either (a) remachined at total additional costs of $24500 and then sold for $33000 or (b) sold as scrap for $6500. Which action is more profitable?
Q5A company has an inventory of 1,250 assorted parts for a line of missiles that has been discontinued. The inventory cost is $72,000. The parts can be either (a) re-machined at total additional costs of $28,000 and then sold for $33,500 or (b) sold as scrap for $3,500. What would be the difference in costs between these two alternatives?
Allegiance, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative?
The Lantern Corporation has 1,000 obsolete lanterns that are carried in inventory at a manufacturing cost of P20,000. If the lanterns are remachined for P5,000, they could be sold for P9,000. Alternatively, the lanterns could be sold for scrap for P1,000. Which alternative is more desirable and what are the total relevant costs for that alternative?
Kim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $23,000and sold for $28,000. Another alternative is to sell the units to a junk dealer for $8,500. Should Kim Yin Company scrap or rework the units? By how much will they be better off? Please provide the answers as well as the solutions to the questions. Thank you!
SCRAP or REWORK Seko Company has 5,000 obsolete truck parts that are carried in inventory at a cost of P50,000. The company is faced with a decision whether to scrap the parts or modify them:  If the parts were junked, the company would realize only 10% of its cost.  Should the company modify the parts, it will spend P10,000 for materials, P2,000 for direct labor, and overhead equal to 40% of prime costs. The new parts will sell for P25,000 in the market. REQUIREMENT:1. Should Seko Company modify or scrap the parts? Show solutions for the requirement.