Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.60 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.15 for direct labor, and $0.45 for overhead without increasing its capacity. The $0.45 for overhead includes an allocation of $0.30 per cookle for fixed overhead. However, total fixed overhead for the company would not increase if Mel's makes the cookies. Mel himself has come to you for advice. "It would cost me $0.80 to make the cookies, but only $0.60 to buy. Should I continue buying them?" Materials and labor are variable costs, but variable overhead would be only $0.15 per cookie. Two cookies are put into every lunch.
Q: Pharoah's Wind Toys manufactures decorative kites, banners, and windsocks. During the month of…
A:
Q: Sequoia Paper Products, Inc., manufactures boxed stationery for sale to specialty shops. Currently,…
A: The operating income is the income that is earned by the company through its production process.
Q: The JMI Creamery Co. produces ice-cream bars for vending machines and has an annual demand for 72000…
A: As student requested to answer only first two parts. Hence only 2 parts are answered8
Q: Dairyplus processes organic milk into plain yogurt. Dairyplus sells plain yogurt to hospitals,…
A: Sell the existing product or further processing is a managerial decision which is based on various…
Q: uses 34,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are:…
A: Introduction:- The following basic information as follows under:- Currently total cost to make the…
Q: Custard's Bakery produces a pie that requires 2.6 pounds of fruit per pie. The allowance for waste…
A: Standard direct material is the raw material quantity that is required to produce the product. The…
Q: Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 28,000 rolls annually…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Carol’s Cupcakes sells cupcakes and other desserts through its retail store. The company has always…
A: The rule is to accept the offer from the supplier if the benefits of offers exceed the costs of…
Q: Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 27,000 rolls annually…
A: Please find the answer to the above question below:
Q: . If Reuben accepts the offer, what will the effect on profit be?
A: Presently the total cost to make the rolls = 0.24 + 0.39 + 0.15 + 0.20 = $ 0.98 Potential seller is…
Q: Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each…
A: Average per unit manufacturing cost = Direct Material + Direct Labor + Variable manufacturing…
Q: Gooby Gummies makes taffy candy, which it sells at local supermarkets. The fixed monthly cost to…
A: Profit = {Unit sales ( Sales per unit - Variable per unit ) } - Fixed cost At present Unit Sales =…
Q: Santora Company manufactures two products—toaster ovens and bread machines. The following data are…
A: Machine hours required per unit of Toster Ovens = 1 hour / 6 toaster ovens per machine hour = 0.17…
Q: Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells…
A: Total cost of making cookies = Variable cost + opportunity cost Total cost of buying = Buying…
Q: Gooby Gummies makes taffy candy, which it sells at local supermarkets. The fixed monthly cost to…
A: The price of selling is the amount at which consumers are required to pay for a manufactured good or…
Q: Just-A-Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the…
A: The differential analysis is performed to analyse the making and buying decisions and impact of…
Q: Shilling Manufacturing produces and sells oil filters for $3.25 each. A retailer has offered to…
A: The question is based on the concept of Financial Management.
Q: three products: chairs, big tables, and little tables. Each chair requires 2 hours in the assembly…
A: Solving through linear programming problem. Let, X1= number of chairs X2= number of big tables X3=…
Q: SixthZ currently produces and sells 1,200 treehouses per year and sells them at $1200 per treehouse.…
A: Introduction: Current stakeholders in a general company have equal financial and legal obligations.…
Q: DIANNE ANCHETA operates a cafeteria for its employees. The operations of the cafeteria requires…
A: This question deals with the decision making concept. In this question, we needs to calculate the…
Q: Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each…
A: Incremental cost means the variable cost which increases with the increase in the production. Where…
Q: Adams Furniture receives a special order for 10 sofas for a special price of $3,000. The direct…
A: Special order: A special order can be defined as a unique, one-time order made by a customer. A…
Q: City Pizza is adding salads and pasta dishes to their available menu items. The they will sell 1…
A: Management Accounting - In order to assist managers in making decisions, management accounting can…
Q: Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells…
A: Given the following information: Mel's purchases the cookies for $0.60 each Mel's can bake each…
Q: shreds, and distributes a variety of salad mixes in 2-pound bags. Doug Voss, Operations VP, is…
A: The cross over point is the point where total costs of different alternative are equal.
Q: Healthy Hearth specializes in lunches for health-conscious people. The company produces a small…
A: (a ) Operating Income of Healthy Hearth’s operating income if it accepts this order it increases by…
Q: Savoury Foods, Inc. prepares meals for several airlines, and sales average 300,000 meals per month.…
A: Batch costing is the aggregated cost of similar items that are manufactured in batches either for…
Q: The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet. The annual…
A: Given information is: The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super…
Q: Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 37,867 rolls annually…
A: In order to compute the profit on accepting the offer from the supplier, a comparison of Total cost…
Q: Reuben’s Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually…
A: Production Cost - It refers to the costs incurred for manufacturing a product or services which…
Q: During Christmas in Ghana the demand for children dresses at Takoradi mall is 500 units per month.…
A: Annual demand=Monthly units×12=500×12=6,000 units
Q: Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in…
A: Optimum quantity to be order a time and number of order in a year are used to minimized the ordering…
Q: Carondelet Coffee has begun making and selling pastries. The fixed costs of making the pastry are…
A: Contribution margin per pastry = sales price - variable costs = $3 - $0.75 = $2.25
Q: Sequoia Paper Products, Inc., manufactures boxed stationery for sale to specialty shops. Currently,…
A: Net benefit on Accepting the special order: Benefits = 3.1 per box = 3.1*30000 = $93000 Costs =…
Q: Required information [The following information applies to the questions displayed below.] Mel's…
A:
Q: Fairmount Travel Gear produces backpacks and sells them to vendors who sell them under their own…
A: Introduction: Riverside Discount Mart, a discount shop chain, has requested 35,000 backpacks from…
Q: Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 33,000 rolls annually…
A: Pofit/loss on buying the rolls=Total cost of making-Total cost of buying
Q: Vince's Pizza delivers pizzas to dormitories and apartments near a major state university. The…
A: Formula: Break even units = Fixed cost / contribution margin per unit Contribution margin per unit =…
Q: HASF Furniture Inc. manufactures a moderate-price set of lawn furniture (a table and four chairs)…
A: Variable costs are costs that changes with change in level of activity. Fixed costs are costs that…
Q: Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 31,000 rolls annually…
A: In make or buy decision making, that option should be adopted which is less costly.
Q: Sequoia Paper Products, Inc., manufactures boxed stationery for sale to specialty shops. Currently,…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: SixthZ currently produces and sells 1,200 treehouses per year and sells them at $1200 per treehouse.…
A: Introduction: After deducting the expenses and the cost of sales from income, operating income is…
Q: The JMT Creamery Co. produces ice-cream bars for vending machines and has an annual demand for 72000…
A: The question is related to Inventory Management. In the given question it is given that the company…
Q: Given the information below, should Bakeryco take SFco’s order?
A:
Q: A service garage uses 204 boxes of cleaning cloths a year. The boxes cost $12 each. The cost to…
A: Annual requirement = 204 Boxes Order size = 12 Boxes Ordering cost per order = $ 15 Annual holding…
Q: a) Kwik supermart has ordered the following supplies over the last year from various suppliers:…
A: Solution:- Average price charged by the new supplier will be the 11% less than the average of the…
a. Prepare a schedule to show the differential costs per cookie.
b. Should mel continue to buy the cookies?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- This year, Hassell Company will ship 4,000,000 pounds of chocolates to customers with total order-filling costs of 900,000. There are two types of customers: those who order 50,000 pound lots (small customers) and those who order 250,000 pound lots (large customers). Each customer category is responsible for buying 1,500,000 pounds. The selling price per pound is 2 per lb for the 50,000 pound lot and 3 per lb for the larger lots, due to differences in the type of chocolate. ABC would likely assign order-filling costs to the customer type as follows: a. 450,000, small; 450,000, large (using pounds as the driver) b. 360,000, small; 540,000, large (using revenue as the driver) c. 750,000, small; 150,000, large (using number of orders as the driver) d. 450,000, small; 450,000, large (using customer type as the driver)Kaune Food Products Company manufactures canned mixed nuts with an average manufacturing cost of 52 per case (a case contains 24 cans of nuts). Kaune sold 150,000 cases last year to the following three classes of customer: The supermarkets require special labeling on each can costing 0.04 per can. They order through electronic data interchange (EDI), which costs Kaune about 61,000 annually in operating expenses and depreciation. Kaune delivers the nuts to the stores and stocks them on the shelves. This distribution costs 45,000 per year. The small grocers order in smaller lots that require special picking and packing in the factory; the special handling adds 25 to the cost of each case sold. Sales commissions to the independent jobbers who sell Kaune products to the grocers average 8 percent of sales. Bad debts expense amounts to 9 percent of sales. Convenience stores also require special handling that costs 30 per case. In addition, Kaune is required to co-pay advertising costs with the convenience stores at a cost of 15,000 per year. Frequent stops are made to each convenience store by Kaune delivery trucks at a cost of 30,000 per year. Required: 1. Calculate the total cost per case for each of the three customer classes. (Round unit costs to four significant digits.) 2. Using the costs from Requirement 1, calculate the profit per case per customer class. Does the cost analysis support the charging of different prices? Why or why not? 3. What if Kaune charged the average price per case to all customer classes? How would that affect the profit percentages?Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 16 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 40 percent of next months sales are in the finished goods inventory. Ingles also purchases sufficient materials to ensure that materials inventory is 60 percent of the following months scheduled production. Ingless sales budget in units for the next quarter is as follows: Ingless ending inventories in units for July 31 are as follows: Required: 1. Calculate the number of tables to be produced during August. 2. Disregarding your response to Requirement 1, assume the required production units for August and September are 2,100 and 1,900, respectively, and the July 31 materials inventory is 4,000 units. Compute the number of table legs to be purchased in August. 3. Assume that Ingles Corporation will produce 2,340 units in September. How many employees will be required for the Assembly Department in September? (Fractional employees are acceptable since employees can be hired on a part-time basis. Assume a 40-hour week and a 4-week month.) (CMA adapted)
- Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?Cinnamon Depot bakes and sells cinnamon rolls for $1.75 each. The cost of producing 500,000 rolls in the prior year was: At the start of the current year, Cinnamon Depot received a special order for 18,000 rolls to be sold for $1.50 per roll. The company estimates it will incur an additional $1,000 in total fixed costs in order to lease a special machine that forms the rolls in the shape of a heart per the customers request. This order will not affect any of its other operations. Should the company accept the special order? (Show your work.)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?
- Marcotti Cupcakes bakes and sells a basic cupcake for $1.25. The cost of producing 600,000 cupcakes in the prior year was: At the start of the current year, Marcotti received a special order for 15,000 cupcakes to be sold for $1.10 per cupcake. To complete the order, the company must incur an additional $700 in total fixed costs to lease a special machine that will stamp the cupcakes with the customers logo. This order will not affect any of Marcottis other operations and it has excess capacity to fulfill the contract. Should the company accept the special order? (Show your work.)Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?NoFat manufactures one product, olestra, and sells it to large potato chip manufacturers as the key ingredient in nonfat snack foods, including Ruffles, Lays, Doritos, and Tostitos brand products. For each of the past 3 years, sales of olestra have been far less than the expected annual volume of 125,000 pounds. Therefore, the company has ended each year with significant unused capacity. Due to a short shelf life, NoFat must sell every pound of olestra that it produces each year. As a result, NoFats controller, Allyson Ashley, has decided to seek out potential special sales offers from other companies. One company, Patterson Union (PU)a toxic waste cleanup companyoffered to buy 10,000 pounds of olestra from NoFat during December for a price of 2.20 per pound. PU discovered through its research that olestra has proven to be very effective in cleaning up toxic waste locations designated as Superfund Sites by the U.S. Environmental Protection Agency. Allyson was excited, noting that This is another way to use our expensive olestra plant! The annual costs incurred by NoFat to produce and sell 100,000 pounds of olestra are as follows: In addition, Allyson met with several of NoFats key production managers and discovered the following information: The special order could be produced without incurring any additional marketing or customer service costs. NoFat owns the aging plant facility that it uses to manufacture olestra. NoFat incurs costs to set up and clean its machines for each production run, or batch, of olestra that it produces. The total setup costs shown in the previous table represent the production of 20 batches during the year. NoFat leases its plant machinery. The lease agreement is negotiated and signed on the first day of each year. NoFat currently leases enough machinery to produce 125,000 pounds of olestra. PU requires that an independent quality team inspects any facility from which it makes purchases. The terms of the special sales offer would require NoFat to bear the 1,000 cost of the inspection team. Based solely on financial factors, explain why NoFat should accept or reject PUs special sales offer.
- NoFat manufactures one product, olestra, and sells it to large potato chip manufacturers as the key ingredient in nonfat snack foods, including Ruffles, Lays, Doritos, and Tostitos brand products. For each of the past 3 years, sales of olestra have been far less than the expected annual volume of 125,000 pounds. Therefore, the company has ended each year with significant unused capacity. Due to a short shelf life, NoFat must sell every pound of olestra that it produces each year. As a result, NoFats controller, Allyson Ashley, has decided to seek out potential special sales offers from other companies. One company, Patterson Union (PU)a toxic waste cleanup companyoffered to buy 10,000 pounds of olestra from NoFat during December for a price of 2.20 per pound. PU discovered through its research that olestra has proven to be very effective in cleaning up toxic waste locations designated as Superfund Sites by the U.S. Environmental Protection Agency. Allyson was excited, noting that This is another way to use our expensive olestra plant! The annual costs incurred by NoFat to produce and sell 100,000 pounds of olestra are as follows: In addition, Allyson met with several of NoFats key production managers and discovered the following information: The special order could be produced without incurring any additional marketing or customer service costs. NoFat owns the aging plant facility that it uses to manufacture olestra. NoFat incurs costs to set up and clean its machines for each production run, or batch, of olestra that it produces. The total setup costs shown in the previous table represent the production of 20 batches during the year. NoFat leases its plant machinery. The lease agreement is negotiated and signed on the first day of each year. NoFat currently leases enough machinery to produce 125,000 pounds of olestra. PU requires that an independent quality team inspects any facility from which it makes purchases. The terms of the special sales offer would require NoFat to bear the 1,000 cost of the inspection team. Assume for this question that NoFat rejected PUs special sales offer because the 2.20 price suggested by PU was too low. In response to the rejection, PU asked NoFat to determine the price at which it would be willing to accept the special sales offer. For its regular sales, NoFat sets prices by marking up variable costs by 10%. If Allyson decides to use NoFats 10% markup pricing method to set the price for PUs special sales offer, a. Calculate the price that NoFat would charge PU for each pound of olestra. b. Calculate the relevant profit that NoFat would earn if it set the special sales price by using its markup pricing method. (Hint: Use the estimate of relevant costs that you calculated in response to Requirement 1b.) c. Explain why NoFat should accept or reject the special sales offer if it uses its markup pricing method to set the special sales price.NoFat manufactures one product, olestra, and sells it to large potato chip manufacturers as the key ingredient in nonfat snack foods, including Ruffles, Lays, Doritos, and Tostitos brand products. For each of the past 3 years, sales of olestra have been far less than the expected annual volume of 125,000 pounds. Therefore, the company has ended each year with significant unused capacity. Due to a short shelf life, NoFat must sell every pound of olestra that it produces each year. As a result, NoFats controller, Allyson Ashley, has decided to seek out potential special sales offers from other companies. One company, Patterson Union (PU)a toxic waste cleanup companyoffered to buy 10,000 pounds of olestra from NoFat during December for a price of 2.20 per pound. PU discovered through its research that olestra has proven to be very effective in cleaning up toxic waste locations designated as Superfund Sites by the U.S. Environmental Protection Agency. Allyson was excited, noting that This is another way to use our expensive olestra plant! The annual costs incurred by NoFat to produce and sell 100,000 pounds of olestra are as follows: In addition, Allyson met with several of NoFats key production managers and discovered the following information: The special order could be produced without incurring any additional marketing or customer service costs. NoFat owns the aging plant facility that it uses to manufacture olestra. NoFat incurs costs to set up and clean its machines for each production run, or batch, of olestra that it produces. The total setup costs shown in the previous table represent the production of 20 batches during the year. NoFat leases its plant machinery. The lease agreement is negotiated and signed on the first day of each year. NoFat currently leases enough machinery to produce 125,000 pounds of olestra. PU requires that an independent quality team inspects any facility from which it makes purchases. The terms of the special sales offer would require NoFat to bear the 1,000 cost of the inspection team. Assume for this question that Allysons relevant analysis reveals that NoFat would earn a positive relevant profit of 10,000 from the special sale (i.e., the special sales alternative). However, after conducting this traditional, short-term relevant analysis, Allyson wonders whether it might be more profitable over the long term to downsize the company by reducing its manufacturing capacity (i.e., its plant machinery and plant facility). She is aware that downsizing requires a multiyear time horizon because companies usually cannot increase or decrease fixed plant assets every year. Therefore, Allyson has decided to use a 5-year time horizon in her long-term decision analysis. She has identified the following information regarding capacity downsizing (i.e., the downsizing alternative): The plant facility consists of several buildings. If it chooses to downsize its capacity, NoFat can immediately sell one of the buildings to an adjacent business for 30,000. If it chooses to downsize its capacity, NoFats annual lease cost for plant machinery will decrease to 9,000. Therefore, Allyson must choose between these two alternatives: Accept the special sales offer each year and earn a 10,000 relevant profit for each of the next 5 years or reject the special sales offer and downsize as described above. Assume that NoFat pays for all costs with cash. Also, assume a 10% discount rate, a 5-year time horizon, and all cash flows occur at the end of the year. Using an NPV approach to discount future cash flows to present value, a. Calculate the NPV of accepting the special sale with the assumed positive relevant profit of 10,000 per year (i.e., the special sales alternative). b. Calculate the NPV of downsizing capacity as previously described (i.e., the downsizing alternative). c. Based on the NPV of Requirements 5a and 5b, identify and explain which of these two alternatives is best for NoFat to pursue in the long term.Berettis Food Mart has 6,000 pounds of raw pork nearing its expiration date. Each pound has a cost of $5.50. The pork could be sold as is for $2.50 per pound to the dog food processing plant, or it could be made into custom Italian sausage and sold in the meat department. The cost of the sausage making is $3.00 per pound and each pound could be sold for $7.50. What should be done with the pork and why?