Chipmunk Company manufactures and sells food processors. A popular consumer magazine has recently evaluated food processors and has ranked Chipmunk’s processors as being “poor quality”. As a result, Chipmunk’s management team has begun to analyze all costs associated with their food processors in more detail, and the following data has been compiled: Scrap Cost P80,000 Quality Training 75,000 Warranty Claims 100,000 Rework Costs 50,000 Inspection of incoming materials 30,000 Product quality audits 60,000 What is Chipmunk’s total external failure costs? A. P180,000 B. P130,000 C. P100,000 D. P160,000

Chipmunk Company manufactures and sells food processors. A popular consumer magazine has recently evaluated food processors and has ranked Chipmunk’s processors as being “poor quality”. As a result, Chipmunk’s management team has begun to analyze all costs associated with their food processors in more detail, and the following data has been compiled: Scrap Cost P80,000 Quality Training 75,000 Warranty Claims 100,000 Rework Costs 50,000 Inspection of incoming materials 30,000 Product quality audits 60,000 What is Chipmunk’s total external failure costs? A. P180,000 B. P130,000 C. P100,000 D. P160,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 18E: A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price...

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55. Chipmunk Company manufactures and sells food processors. A popular consumer magazine has recently evaluated food processors and has ranked Chipmunk’s processors as being “poor quality”. As a result, Chipmunk’s management team has begun to analyze all costs associated with their food processors in more detail, and the following data has been compiled: Scrap Cost P80,000 Quality Training 75,000 Warranty Claims 100,000 Rework Costs 50,000 Inspection of incoming materials 30,000 Product quality audits 60,000 What is Chipmunk’s total prevention costs? A. P105,000 B. P30,000 C. P165,000 D. P75,000
52. Chipmunk Company manufactures and sells food processors. A popular consumer magazine has recently evaluated food processors and has ranked Chipmunk’s processors as being “poor quality”. As a result, Chipmunk’s management team has begun to analyze all costs associated with their food processors in more detail, and the following data has been compiled: Scrap Cost P80,000 Quality Training 75,000 Warranty Claims 100,000 Rework Costs 50,000 Inspection of incoming materials 30,000 Product quality audits 60,000 What is Chipmunk’s total appraisal costs?
Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40: Number of parts produced annually 26,000 Fixed costs $41,000 Variable costs $67,000 Total cost to produce $108,000 Jackson Corporation can purchase the part from an outside supplier for $4.50 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation buys the part, what is the most Jackson Corporation can spend per unit so that operating income is equal to $98,000? Question 23 options: $2.98 $2.19 $3.77 $1.52
Harris Systems has decided to adopt ABC. To remain competitive, Harris Systems’s management believes the company must produce the type of servers produced in Job B (from Decision Case 19-1) at a target cost of $5,400. Harris Systems has just joined a B2B e-market site that management believes will enable the firm to cut direct materials costs by 10%. Harris’s management also believes that a value engineering team can reduce assembly time. Compute the assembling cost savings required per Job B-type server to meet the $5,400 target cost. (Hint: Begin by calculating the direct materials, direct labor, and allocated overhead costs per server.)
Futura Company purchases the 64,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.30 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company’s chief engineer is opposed to making the starters because the production cost per unit is $12.20 as shown below: Per Unit Total Direct materials $ 6.00 Direct labor 2.80 Supervision 1.50 $ 96,000 Depreciation 1.10 $ 70,400 Variable manufacturing overhead 0.50 Rent 0.30 $ 19,200 Total product cost $ 12.20 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $96,000) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space…
Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $51.00 Direct labor 43.00 Variable overhead 38.00 Fixed overhead 33.00 Total costs $165.00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $138.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium?
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Jackson has received a request for a special order of 9,000 units of product "Michael" for $46.35 each. The normal selling price of this product is $51.26 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product "Michael" is computed as follows: Direct materials $17.24 Dirct labor $6.29 Variable manufacturing overhead $3.78 Fixed manufacturing overhead $6.95 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product "Michael"that would increase the variable costs by $6.32 per unit and that would require a one-time investment of $46288 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order.Determine the effect on total net operating income of accepting the special order.…
841 Smooth Move Company manufactures professional paperweights and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $7.00. The new customer is geographically separated from Smooth Move's other customers, and existing sales will not be affected. Smooth Move normally produces 86,000 units but plans to produce and sell only 65,000 in the coming year. The normal sales price is $12 per unit. Unit cost information is as follows: Direct materials $3.10 Direct labor 2.50 Variable overhead 1.15 Fixed overhead 1.80 Total $8.55 Suppose a customer wants to have its company logo affixed to each paperweight using a label. Smooth Move would have to purchase a special logo labeling machine that will cost $12,000. The machine will be able to label the 15,000 units and then it will be scrapped (with no further value). No other fixed overhead activities will be incurred. In addition, each special logo requires additional direct materials of…
18. MARIKINA SHOE Company had a production run of 5, 000 pairs of quality shoes during the month of June 2021, at the following costs per pair: Materials, P80; Labor, P50; and Overhead (125% of direct labor cost). Final inspection revealed that 500 pairs were spoiled which were sold as seconds for P20, 000. The good units were then shipped to the customer at cost plus 50% mark-up on cost. Assuming the spoilage is a result of changes in the specification of the customer, the cost per good units is: a. • P192.5 b. • P209.44 c. • P200.53 d. • P288.75
Quirch Inc. manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor that would provide 4,200 units of product PQ107 for Valters for a price of $150,000. If Quirch does not purchase these parts from the subcontractor it must produce them in-house with the following unit costs: Cost per Unit Direct materials $54 Direct labor 34 Variable overhead 17 In addition to the above costs, if Quirch produces part PQ107, it would have a retooling and design cost of $17,100. The relevant costs of producing 4,200 units of product PQ107 internally are:
Sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 13,100 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials $ 8.90 Direct labor 5.90 Variable manufacturing overhead 1.70 Fixed manufacturing overhead 3.70 Unit product cost $ 20.20 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 20% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 2 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 4 minutes on this machine and that has a contribution margin of $5.30 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the…