Product T is produced for $5.90 per pound. Product T can be sold without additional processing for $7.10 per pound, or processed further into Product U at an additional cost of $0.74 per pound. Product U can be sold for $8.00 per pound. Prepare and show in solution a differential analysis dated August 2 on whether to sell Product T (Alternative 1) or process further into Product U (Alternative 2).
Q: Use this information for Stryker Industries to answer the question that follow. Stryker Industries…
A: Income from the offer acceptance = Units * ( Sale Price - Variable Manufacturing Cost)
Q: Product P is produced for $31 per gallon. Product P can be sold without additional processing for…
A: Where a product which can be further processed in to another product , in that case , we need to…
Q: Walters manufactures a specialty food product that can currently be sold for $22.80 per unit and has…
A: Formula: Incremental income of processing further = Revenue after further processing - Revenue…
Q: Process or Sell Product F is produced for $3.34 per pound. Product F can be sold without additional…
A: Here in this question, we are required to make differential analysis. Differential analysis is made…
Q: It costs Sohar Company OMR 12 of variable and OMR 5 of fixed costs to produce one unit of production…
A: Relevant cost refers to those cost which is relevant for choosing the best alternative whereas…
Q: Bonita Industries produces a product that requires 2.6 pounds of materials per unit. The allowance…
A:
Q: algary Lumber Company incurs a cost of $392 per hundred board feet (hbf) in processing certain…
A: The differential analysis is performed to compare the different alternatives available with respect…
Q: Product F is producted for $98 per pound. Product F can be sold without additional processing for…
A: Contribution = sales - variable cost
Q: Carmen Co. can further process Product J to produce Product D. Product J is currently selling for…
A: Given: Current selling price = $20 Selling price after processing = $38
Q: Maize Company incurs a cost of $35 per unit, of which $20 is variable, to make a product that…
A: Relevant cost per unit = Variable cost per unit + Additional costs per unit to imprint a logo = $20…
Q: It costs Ghala Company OMR 13 of variable and OMR 6 of fixed costs to produce one unit which…
A: The answer is option (e.) [i.e OMR 3,000 Increase] Refer step 2 for explanation
Q: If the price of the material is RO 15 per unit and the annual consumption is 4000 units, the…
A: Economic order Quantity =2×A×OC
Q: Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for…
A: Differential cost is the additional cost to be incurred for producing the product.
Q: Product A is produced for $3.44 per pound. Product A can be sold without additional processing for…
A: Under Differential Analysis, a difference of two or more alternatives is considered to make a…
Q: Green Co. incurs a cost of $15 per pound to produce Product X, which it sells for $26 per pound. The…
A: The differential analysis is performed to compare two different alternatives.
Q: When making the determination of whether or not a selling price should be increased there are many…
A: For a cost-volume profit analysis, we need to first determine the unit selling price and variable…
Q: Zang Co. has the option to either further process product Alpha to produce Product Zeta. The selling…
A: From the given data, Production cost of Product Alpha for each unit = $23 Production cost of Product…
Q: Alnusairat company is processing Milk with a joint cost of $100000 to produce 2000 units of product…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: It costs Ghala Company OMR 13 of variable and OMR 6 of fixed costs to produce one unit which…
A: Net income is the income which is computed by diminution of operating cost from the gross profits.
Q: Campbell Company, which produces and sells a small digital clock, bases its pricing strategy on a 20…
A: Differential analysis or incremental analysis is an accounting technique used by management. In…
Q: Sell or Process Further Jackson Lumber Company incurs a cost of $378 per hundred board feet (hbf) in…
A: Differential Analysis: Differential analysis refers to the analysis of differential revenue that…
Q: Prepare a differential analysis dated April 30 on whether to sell Product J19 (Alternative 1) or…
A: Differential Analysis: Differential analysis refers to the analysis of differential revenue that…
Q: Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $2.40 per unit.…
A: Net income is the income left to an entity after subtracting all the expenses from the revenue…
Q: Kando Company incurs a $10.00 per unit cost for Product A, which it currently manufactures and sells…
A: Cost per unit not eliminated if bought = Cost per unit to make - cost eliminated = $10 - 7 = $3 per…
Q: A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing…
A: Differential analysis is a technique of evaluating the two alternatives by examining their revenues…
Q: Walton Corporation is currently selling 104 units of its product. The company is deciding the price…
A: Lets understand the basics. When any special order sales is made which does not affect the current…
Q: Raven Corporation received an offer from an exporter for 28,000 units of product at $17 per unit.…
A: Differential cost represents the cost that arose between two alternatives. Basically, the cost is…
Q: Carmen Co. can further process Product J to produce Product D. Product J is currently selling for…
A: Formula : Differential revenue = Product D - product J
Q: The joint costs is P85,000. NUBD currently sells both products at the split-off point. If NUBD makes…
A: While making the decision to either sell at the split-off or after further processing, we shall…
Q: Keller Company sells product ZR101 for $25 per unit. The cost of one unit of ZR101 is $18. The…
A: As per the lower-of-cost-or-net realizable value method, we need to recognize the cost of the…
Q: Bunyon Lumber Company incurs a cost of $400 per hundred board feet (hbf) in processing certain…
A: Joint cost: It is the cost of producing two products or services together in a single process.…
Q: Kando Company incurs a $9.00 per unit cost for Product A, which it currently manufactures and sells…
A: Introduction: Incremental analysis, also known as the relevant cost approach, marginal analysis, or…
Q: Golden Corporation contemplates to market a new product. Estimated fixed costs is P1,000,000. The…
A: Variable cost ratio is the ratio of toral variable costs with total sales revenue. Contribution…
Q: Grace Co. can further process Product B to produce Product C. Product B is currently selling for $24…
A: Revenue means the amount earned by selling the goods or services. Revenue is recognized in books of…
Q: It costs Ghala Company OMR 13 of variable and OMR 6 of fixed costs to produce one unit which…
A: A firm needs to take special order decision when a product can be sold in a large quantity to a…
Q: Product A is produced for $3.58 per pound. Product A can be sold without additional processing for…
A: The question is based on the concept of Cost Accounting.
Q: A company manufactures a subcomponent of an assembly for $80 per unit, including fixed costs of $25…
A: Fixed cost will not change with change in decision that MAKE Or BUY It wil be same
Q: Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for…
A: Differential cost of producing Product C = Cost of product C - Cost of product B where, Cost of…
Q: Carmen Co. can further process Product J to produce Product D. Product J is currently selling for…
A: Differential cost of producing Product D = Cost of product D - Cost of product J where, Cost of…
Q: A company manufactures various sized plastic bottles for its medicinal product. The manufacturing…
A: Differential analysis also recognised as the incremental analysis, which is a technique of…
Q: It costs Sohar Company OMR 12 of variable and OMR 5 of fixed costs to produce one unit of production…
A: The question is multiple choice question. Required Choose the Correct Option
Q: Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for…
A: Differential cost = Total cost of producing Product C - Total cost of producing Product B
Q: Suppose that Division T can sell only 10,000 timers to outside customers. What is the lowest…
A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…
Q: Miles Co. can further process Product B to produce Product C. Product B is currently selling for P60…
A: Differential revenue is the amount of net increment of further processing. It can be calculated by…
Q: $4 per unit. The company has the option to purchase the component for $20 per unit. Prepare a…
A: Differential analysis: An analysis which only considers changes in income and expenses of an entity…
Q: If the special order is accepted, what will be the effect on net income?
A: Computation of effect of net operating income if the special order is accepted is shown below :
Q: Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit…
A: The following computations are done for Morris Corporations.
Q: Assuming that the total fixed cost of Vader Co. is expected to increase by 30% next period, what…
A: Break Even Sales in Pesos = Fixed Cost / Weighted Average Contribution Margin Weighted Average…
Q: Crane Company is starting business and is unsure of whether to sell its product assembled or…
A: When business has alternatives of further processing products or selling unassembled products, then…
Q: Process or Sell Product A is produced for $3.54 per pound. Product A can be sold without additional…
A: The product can be processed further or not depends on the cost spent and revenue earned.
Product T is produced for $5.90 per pound. Product T can be sold without additional
processing for $7.10 per pound, or processed further into Product U at an additional
cost of $0.74 per pound. Product U can be sold for $8.00 per pound. Prepare and show in solution a differential analysis dated August 2 on whether to sell Product T (Alternative 1) or process further into Product U (Alternative 2).
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- Sell or process further Calgary Lumber Company incurs a cost of 315 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for 440 per hbf. An alternative is to produce a finished cut at a total processing cost of 465 per hbf, which can be sold for 600 per hbf. Prepare a differential analysis dated March 15 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge for each copy made. Markson made 9,000 copies and paid a total of $480 in January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson uses the high-low method to analyze costs?Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
- Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?Morrill Company produces two different types of gauges: a density gauge and a thickness gauge. The segmented income statement for a typical quarter follows. Includes depreciation. The density gauge uses a subassembly that is purchased from an external supplier for 25 per unit. Each quarter, 2,000 subassemblies are purchased. All units produced are sold, and there are no ending inventories of subassemblies. Morrill is considering making the subassembly rather than buying it. Unit-level variable manufacturing costs are as follows: No significant non-unit-level costs are incurred. Morrill is considering two alternatives to supply the productive capacity for the subassembly. 1. Lease the needed space and equipment at a cost of 27,000 per quarter for the space and 10,000 per quarter for a supervisor. There are no other fixed expenses. 2. Drop the thickness gauge. The equipment could be adapted with virtually no cost and the existing space utilized to produce the subassembly. The direct fixed expenses, including supervision, would be 38,000, 8,000 of which is depreciation on equipment. If the thickness gauge is dropped, sales of the density gauge will not be affected. Required: 1. Should Morrill Company make or buy the subassembly? If it makes the subassembly, which alternative should be chosen? Explain and provide supporting computations. 2. Suppose that dropping the thickness gauge will decrease sales of the density gauge by 10 percent. What effect does this have on the decision? 3. Assume that dropping the thickness gauge decreases sales of the density gauge by 10 percent and that 2,800 subassemblies are required per quarter. As before, assume that there are no ending inventories of subassemblies and that all units produced are sold. Assume also that the per-unit sales price and variable costs are the same as in Requirement 1. Include the leasing alternative in your consideration. Now, what is the correct decision?Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
- Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling cereal at a price of $22,000 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs. Should Almond Treats make or buy the almond cereal?Bethany Company has just completed the first month of producing a new product but has not yet shipped any of this product. The product incurred variable manufacturing costs of 5,000,000, fixed manufacturing costs of 2,000,000, variable marketing costs of 1,000,000, and fixed marketing costs of 3,000,000. Under the variable costing concept, the inventory value of the new product would be: a. 5,000,000. b. 6,000,000. c. 8,000,000. d. 11,000,000.
- Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.Clark Kent Inc. buys crypton for $.80 a gallon. At the end of processing in Dept. 1, crypton splits off into products plutonium, tantalum, and xenon. Plutonium is sold at the split-off point with no further processing. Tantalum and xenon require further processing before they can be sold. Tantalum is processed in Dept. 2, and xenon is processed in Dept. 3. Following is a summary of costs and other related data for the year ended December 31: No inventories were on hand at the beginning of the year, and no crypton was on hand at the end of the year. All gallons on hand at the end of the year were complete as to processing. Kent uses the net realizable value method of allocating joint costs. Required: Calculate the allocation of joint costs. Calculate the total cost per unit for each product. In examining the product cost reports, Lois Lane, Vice President—Marketing, notes that the per-unit cost of tantalum is greater than the selling price of $2.75 that can be received in the competitive marketplace. Lane wonders whether they should stop selling tantalum. How did Lane determine that the product was being sold at a loss? What per unit cost should be used in determining whether tantalum should be sold?Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)
