National Chemical Company manufactures a chemical compound that is sold for $53 per gallon. A newvariant of the chemical has been discovered, and if the basic compound were processed into the newvariant, the selling price would be $81 per gallon. National expects the market for the new compoundvariant to be 8,500 gallons initially and determines that processing costs to refine the basic compoundinto the new variant would be $136, 000. Required: What would be the effect on total profit if Nationalproduces the new compound variant? Should National produce the new compound variant?

The incremental cost analysis is that type of analysis that helps the management in detailing the…

Answered: National Chemical Company manufactures…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for all sprinklers by an average of $0.70. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 490.000 sprinkler units at an average unit selling price of $28.60. The manufacturing costs are $7,866,260 variable and $2.011,486 fixed. Selling and administrative costs are $2,644.240 variable and $809,370 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to O decimal places, e.g. 5X and net income answers to 2 decimal places, e.g. 5,275.25.) Contribution margin ratio Net income Current New % Effect Decrease Increase eTextbook and Media Save for Later Attempts: unlimited Submit Answer
A company has a process that results in 980 kilograms of Product X that can be sold for $9 per kilogram. An alternative would be to process Product X further at a cost of $1960 and then sell it for $16 per kilogram. Should management sell Product X now or should Product X be processed further and then sold? Process further; the company will be better off by $4900. Sell now; the company will be better off by $4900. Process further; the company will be better off by $6860. Sell now; the company will be better off by $8820.
Mueller Corp. manufactures flash drives that sell for $5.00. Fixed costs are $28,000 and variable costs are $3.60 per unit. Mueller can buy a newer production machine that will increase fixed costs by $8,000 per year, and will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mueller's break-even point in units?
Damon Industries manufactures 15,000 components per year. The manufacturing costs of the components were determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside supplier has offered to sell the component for $16. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $11,600. If Damon purchases the component from the supplier instead of manufacturing it, the effect on operating profits would be a: Multiple Choice O O $78,900 increase. $42,100 increase. $37,900 decrease. $ 129,000 20,500 60,000 80,000 $18,900 decrease.
One of the bulk raw beverages, which Blanchard buys, is gin. Assume that the cost of purchasing enough raw gin for one case is $100. Each time they place an order their cost for processing the order is $20. The annual holding cost is 33% of item cost and demand for gin is 2500 cases per year. Calculate the EOQ for this product. If the lead-time is one day, what is the reorder point ROP? What is the annual total cost of this strategy? What is the average inventory? What is the inventory turnover? Please do fast ASAP fast
The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer to buy 15,000 tools at $1.80 each. Lamar sells its tools wholesale for $1.90 each; the average cost per unit is $1.88, of which $0.32 is fixed costs. If Lamar were to accept Boston's offer, what would be the increase in Lamar's operating profits? Multiple Choice O O $1,500. $5,100. $1,200. $3,600.
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Please help me. Thankyou.
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20.60 per pound and costs $15.40 per pound to produce. Product D would sell for $36.90 per pound and would require an additional cost of $10.10 per pound to produce. What is the differential cost of producing Product D?
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $180,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $895,000 per year. The fixed costs associated with this will be $228,000 per year, and variable costs will amount to 24 percent of sales. The equipment necessary for production of the Potato Pet will cost $970,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 22 percent and a required return of 16 percent. Calculate the Time 0 cash flow for this project. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Calculate the annual OCF for this project. Note: Do not round…
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Cobe Company has manufactured 230 partially finished cabinets at a cost of $57,500. These can be sold as is for $69,000. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $13,800, and the finished cabinets could be sold for $92,000. (a) Prepare a sell as is or process further analysis of income effects. (b) Should the cabinets be sold as is or processed further and then sold? (a) Sell or Process Analysis Revenue Costs Income Incremental income (loss) to process further (b) The company should: Sell As Is Process Further

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