Determine the optimum mix of the scraps that should be used in producing 1000 tons of the alloys.
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An industrial recycling center uses two scrap aluminum metals, A and B, to produce a special alloy. Scrap A contains 6% aluminum, 3% silicon and 4% carbon. Scrap B has 3% aluminum, 6% silicon and 3% carbon. The costs per ton for scraps A and B are $100 and $80, respectively. The specifications of the special alloy require that (1) the aluminum content must be at least 3% and at most 6%, (2) the silicon content must lie between 3% and 5%, and (3) the carbon content must lie between 3% and 7%. Determine the optimum mix of the scraps that should be used in producing 1000 tons of the alloys.
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- Two alternatives are under consideration for a tapered fastening pin. Either design will serve the purpose and will involve the same material and manufacturing cost except for the lathe and grinder operations. Design A will require 16 hours of lathe time and 4.5 hours of grinder time per 1,000 units. Design B will require 7 hours of lathe time and 12 hours of grinder time per 1,000 units. The operating cost of the lathe including labor is ₱200 per hour. The operating cost of the grinder including labor is ₱150per hour. Which design should be adopted if 100,000 units are required per year and what is the economic advantage of the best alternative?Hardex Inc is a manufacturer of commercial and heavy industrial pipe nozzles. The firm’s two product lines are called Easyflow and Heavyflow nozzles. The primary raw materials are flexible steel sheets, and 15cm x 13cm of plastic sheets. Each Easyflow nozzle requires a 2/3 of a meter and a Heavyflow nozzle requires a one metre of steel sheet. Allowing for normal breakage and scrap steel sheet, the company can cut either enough to make four Easyflow or two Heavy flow nozzles from a single steel sheet. Other raw materials are costly and treated as indirect materials. Karen Shaw, Hardex Inc.’s accountant has gathered the following information in preparation for the company’s annual budget for the next year. Sales in the fourth quarter of the current year are expected to be 50,000 Easyflow and 40,000 Heavyflow nozzles. The sales manager predicts that, over the next two years, sales in each product line will grow by 5000 units each quarter over the previous quarter. Hardex’s sales…The Pittsburgh division of Vermont Machinery, Inc., manufactures drill bits.One of the production processes for a drill bit requires tipping, whereby carbide tips are inserted into the bit to make it stronger and more durable. This tipping process usually requires four or five operators, depending on the weekly workload. The same operators are also assigned to the stamping operation, where the size of the drill bit and the company's logo is imprinted on the bit. Vermont is considering acquiring three automatic tipping machines to replace the manual tipping and stamping operations. If the tipping process is automated, the division's engineers will have to redesign the shapes of the carbide tips to be used in the machine. The new design requires less carbide, resulting in savings on materials. The following financial data have been compiled: Project life: six years. Expected annual savings: reduced labor, $56,000; reduced material, $75,000; other benefits (reduced carpal tunnel syndrome…
- In connection with surfacing a new highway, a contractor has a choice of two sites on which to set up the asphalt-mixing plant equipment. The contractor estimates that it will cost $2.75 per cubic yard mile (yd3-mile) to haul the asphalt-paving material from the mixing plant to the job location. Factors relating to the two mixing sites are as follows given in the shown table (production costs at each site are the same): The job requires 50,000 cubic yards of mixed-asphalt-paving material. It is estimated that four months (17 weeks of five working days per week) will be required for the job. Compare the two sites in terms of their fixed, variable, and total costs. Assume that the cost of the return trip is negligible. Which is the better site? For the selected site, how many cubic yards of paving material does the contractor have to deliver before starting to make a profit if paid $12 per cubic yard delivered to the job location?Lamont Industries produces chemicals for the swimming pool industry. In one joint process, 10,000 gallons of GSX are processed into 7,000 gallons of xenolite and 3,000 gallons of banolide. The cost of the joint process, including the GSX, is $19,000. The firm allocates $13,300 of the joint cost to the xenoliteand $5,700 of the cost to the banolide. The 3,000 gallons of banolide can be sold at the split-off point for $2,500, or be processed further into a product called kitrocide. The sales value of 3,000 gallons of kitrocide is $10,000, and the additional processing cost is $8,100. Required: Lamont’s president has asked your consulting firm to make a recommendation as to whether the banolide should be sold at the split-off point or processed further. Write a letter providing an analysis and a recommendation.A machine part to be machined may be made either from an alloy of aluminum or steel. Thereis an order for 7,000 units. Steel costs ₱8.00 per kg, while aluminum costs ₱13.00 per kg. Ifsteel is used, the steel per unit weighs 100 grams; for aluminum, 25 grams. When steel isused, 60 units can be produced per hour; for aluminum, 100 units per hour with the aid of atool costing ₱800.00, which will be useless after the 8,000 units are finished. The cost of themachine and operator is ₱100.00 per hour. If all other costs are identical, determine whichmaterial will be more economical.
- Ole Company manufactures two products, Product A and Product B. Currently, machine hours are used to allocate the overhead costs to the two products. Ole Company is considering adopting an activity-based costing system. If so, overhead costs will be traced to the following activities: Activities Machining Quality Control Material Moves Activity cost pools $300,000 $200,000 $400,000 Cost Drivers Machine Hours Number of inspections Number of moves Product A 30,000 400 2,000 Product B 20,000 600 6,000 (a) Calculate the total overhead cost assigned to Product A under the current system. (b) Calculate the total overhead cost for Product A if the company implements activity-based costing system. (c) Briefly explain which costing method gives a more accurate picture of the costs. (d) Suppose you are the management accountant in a university. List any three (3)activities commonly carried out in universities and identify an appropriate cost driver for each activity.To make a batch of 1,000 units of a certain item, it is estimated that 120 direct labor hours are required at a cost of $10/hour. Direct material costs are estimated at $1,500 per batch. The overhead costs are calculated based on an overhead rate of $7.50 per direct labor hour. The item can be readily purchased from a local vendor for $4 per unit. a. Should the item be made or purchased? b. Over what range of overhead rate is your answer in part a valid?In the design of an automobile engine part, an engineer has a choice of either steel casting or an aluminum alloy casting. Either machine provides the same service. However, the steel casting weighs 8 ounces, compared with 5 ounces for the aluminum casting. Every pound of extra weight in the automobile has been assigned a penalty of $6 to account for increased fuel consumption during the life cycle of the car. The steel casting costs $3.20per pound, while the aluminum allow can be cast for $7.40 per pound. Machining cost per casting are $5.00 for steel and $4.20 for aluminum. Which material should the engineer select, and what is the difference in unit costs? 1 pound = 16 ounce
- Frieling Company installs granite countertops in customers' homes.First, the customer chooses the particular granite slab, and then Frielingmeasures the countertop area at the customer's home, cuts the granite tothat shape, and installs it. The Tramel job calls for direct materials of$1,900 and direct labor of $500. Overhead is applied at the rate of 140 percent of direct labor cost. Unfortunately, one small countertop breaksduring installation and Frieling must cut another piece and install it toproperly complete the job. The additional rework required directmaterials costing $400 and direct labor costing $100. Assume that thespoilage was due to carelessness by a Frieling worker and it isconsidered to be normal spoilage. Refer to the data in Cornerstone Exercise 5.4. Now assume that thespoilage was due to the inherently fragile nature of the piece of stonepicked out by the Tramels. Frieling had warned them that the chosenpiece could require much more care and potentially additional…North Platt Machinery Company manufactures a shaft that must fit inside a sleeve. The firm has just received an order of 50,000 units from Southernstar Exploration Company for $80 per unit. North Platt can manufacture the shaft at $50 per unit. Southernstar desires the diameter of the shaft to be 1.275 cm. The diameter of the shaft must not be less than 1.25 cm in order to fit properly inside the sleeve. To be able to insert the shaft into a sleeve without the use of force, the diameter cannot be larger than 1.30 cm. A defective shaft is discarded and a replacement has to be shipped via express freight to locations around the world. North Platt estimates that the average cost of handling and shipping a replacement shaft will be approximately $70. Shown below are the diameters from a sample of 80 shafts manufactured during a trial run: Diameter Number of Units Diameter Number of Units Diameter Number of Units 1.232 1 1.273 6 1.292 2 1.240 2 1.274 7 1.293 1 1.250 3…The Seattle Recycling Company (SRC) purchases old water and soda bottles and recycles them to produce plastic covers for outdoor furniture. The company processes the bottles in a special piece of equipment that first melts, then reforms the plastic into large sheets that are cut to size. The edges from the cut pieces are sold for use as package filler. The filler is considered a byproduct. SRC can produce 25 table covers, 75 chair covers, and 5 pounds of package filler from 100 pounds of bottles. In June, SRC had no beginning inventory. It purchased and processed 120,000 pounds of bottles at a cost of $600,000. SRC sold 25,000 table covers for $12 each, 80,000 chair covers for $8 each, and 5,000 pounds of package filler at $1 per pound. Q. Assume that SRC allocates the joint costs to table and chair covers using the sales value at splitoff method and accounts for the byproduct using the sales method. What is the ending inventory cost for each product and gross margin for SRC?
