give me answer please Problem 23-2B Scrap or rework P2Micron Manufacturing produces telescopes. This month it produced 50 telescopes at a cost of $9,000. These telescopes were damaged instorage. Management has identified three alternatives for these telescopes.1. They can be sold as scrap to a wholesaler for $3,750.2. They can be disassembled at a cost of $2,000 and the parts sold to a recycler for $6,500.3. They can be reworked and turned into good units. The cost of reworking the units will be $3,600, after which the units can be sold for$25,000.Required(1) Compute the income for each alternative. (2) Which alternative should management select?

For each situation at hand we will have to do a financial analysis to determine which alternative is…

Answered: Problem 23-2B Scrap or rework P2 Micron…

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Process Cost Systems

Section: Chapter Questions

Problem 17.3TIF

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Communication Jamarcus Bradshaw, plant, manager of Georgia Paper Company's papermaking mill, was looking over the cost of production reports for July and August for the Papermaking Department. The reports revealed the following: July August Pulp and chemicals 295,600 304,100 Conversion cost 146,000 149,600 Total cost 441,600 453,700 Number of tons + 1,200 + 1,130 Cost per ton 368 401.50 Jamarcus was concerned about the increased cost per ton from the output of the department. As a result, he asked the plant controller to perform a study to help explain these results. The controller, Leann Brunswick, began the analysis by performing some interviews of key plant personnel in order to understand what the problem might be. Excerpts from an interview with Len Tyson, a paper machine operator, follow: Len: We have two papermaking machines in the department I have no data, but I think paper machine No. 1 is applying too much pulp and, thus, is wasting both conversion and materials resources. We haven't had repairs on paper machine No. 1 in a while. Maybe this is the problem. Leann. How does too much pulp result i n wasted resources? Len: Well, you see, if too much pulp is applied, then we will waste pulp material. The customer will not pay for the extra product we just use more material to make the product. Also, when there is too much pulp, the machine must be slowed down in order to complete the drying process. This results in additional conversion costs. Leann: Do you have any other suspicions? Len: Well, as you know, we have two productsgreen pa per and yellow pa per. They are identical except for the color. The color is added to the papermaking process in the paper machine. I think that during August these two color papers have been behaving differently. I don't have any data, but it seems as though the amount of waste associated with the green paper has increased. Leann. Why is this? Len: I understand that there has been a change in specifications for the green paper, starting near the beginning of August This change could be causing the machines to run poorly when making green paper. If that is the case, the cost per ton would increase for green paper. Leann also asked for a database printout providing greater detail on August's operating results. September 9 Requested by: Leann Brunswick Papermaking DepartmentAugust detail Prior to preparing a report, Leann resigned from Georgia Paper Company to start her own business. You have been asked to lake the data that Leann collected and write a memo to Jamarcus Bradshaw with a recommendation to management. Your memo should include analysis of the August data to determine whether the paper machine or the paper color explains the increase in the unit cost from July. Include any supporting schedules that are appropriate. Round all calculations to the nearest cent.

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