Denver Cover Plant Annual Budget for Operating Costs Materials $14,000,000 Labor: Direct $13,100,000 Supervision $900,000 Indirect plant $4,000,000 $18,000,000 Overhead: Depreciation – equipment $3,200,000 Depreciation - building $7,000,000 Pension expense $5,000,000 Plant manager and staff $,800,000 Corporate expenses* $4,000,000 $20,000,000 Total budgeted costs $52,000,000 Question. The annual budget costs that are relevant to the decision regarding closing the plant. Question. The annual budgeted costs that are irrelevant to the decision regarding closing the plant and explain why they are irrelevant. Question. Any nonrecurring costs that would arise due to the closing of the plant, and explain how they would affect the decision. The plant has a bid on for $35 million. The plant operating costs was set at $52 million. Facts: if plant closes based on commitment to use high-quality fabrics, terminal charges would amount to 20$ of the cost of direct materials. --400 employes will lose job --base pay is $18.80 --plant must proved 12 months of pay after plant closing. would estimate cost %1.5 million --early pension plan would be $3 million --salvage value of equipment and building is $3.2 million if plant close.
Hello, I need some help. My study question is very similar to question submitted about the sample company Qualsupport and Denver Cover Plant. My figures are different. Please assist. I am trying to follow thru with the examples provided. Here is what I am working with.
|
Denver Cover Plant |
||
|
Annual Budget for Operating Costs |
||
|
Materials |
|
$14,000,000 |
|
Labor: |
|
|
|
Direct |
$13,100,000 |
|
|
Supervision |
$900,000 |
|
|
Indirect plant |
$4,000,000 |
$18,000,000 |
|
Overhead: |
|
|
|
|
$3,200,000 |
|
|
Depreciation - building |
$7,000,000 |
|
|
Pension expense |
$5,000,000 |
|
|
Plant manager and staff |
$,800,000 |
|
|
Corporate expenses* |
$4,000,000 |
$20,000,000 |
|
Total budgeted costs |
|
$52,000,000 |
Question. The annual budget costs that are relevant to the decision regarding closing the plant.
Question. The annual budgeted costs that are irrelevant to the decision regarding closing the plant and explain why they are irrelevant.
Question. Any nonrecurring costs that would arise due to the closing of the plant, and explain how they would affect the decision.
The plant has a bid on for $35 million. The plant operating costs was set at $52 million.
Facts: if plant closes based on commitment to use high-quality fabrics, terminal charges would amount to 20$ of the cost of direct materials.
--400 employes will lose job
--base pay is $18.80
--plant must proved 12 months of pay after plant closing. would estimate cost %1.5 million
--early pension plan would be $3 million
--salvage value of equipment and building is $3.2 million if plant close.
Please help step by step.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
