QUESTION 3The Asian Division of Worldwide Reference Corporation produces a pocket dictionarycontaining popular phases in six Asian languages. Last year, the company sold 100,000 unitsof dictionary at RM20 per unit. Given below the cost incurred with regard to the dictionary inlast year.Costs:Variable (RM)Fixed (RM)Direct material600,000Direct labour400,000Production overhead300,000100,000200,000Selling and administrative220,000The company expects the same costs as last year will incur for the current year.Required:f. The sales manager is convinced that a 10% reduction in the selling price, combined with aRM30,000 increase in advertising, would cause annual sales in units to inerease by onethird (1/3).i. Calculate the new break-even point (in units) and net operating income.ii. Would you recommend that the company do as the sales manager suggests?

QUESTION 3 The Asian Division of Worldwide Reference Corporation produces a pocket dictionary containing popular phases in six Asian languages. Last year, the company sold 100,000 units of dictionary at RM20 per unit. Given below the cost incurred with regard to the dictionary in last year. Costs: Variable (RM) Fixed (RM) Direct material 600,000 400,000 300,000 100,000 Direct labour Production overhead 200,000 220,000 Selling and administrative The company expects the same costs as last year will incur for the current year. Required: f. The sales manager is convinced that a 10% reduction in the selling price, combined with a RM30,000 increase in advertising, would cause annual sales in units to increase by one third (1/3). i. Calculate the new break-even point (in units) and net operating income. ii. Would you recommend that the company do as the sales manager suggests?

QUESTION 3 The Asian Division of Worldwide Reference Corporation produces a pocket dictionary containing popular phases in six Asian languages. Last year, the company sold 100,000 units of dictionary at RM20 per unit. Given below the cost incurred with regard to the dictionary in last year. Costs: Variable (RM) Fixed (RM) Direct material 600,000 400,000 300,000 100,000 Direct labour Production overhead 200,000 220,000 Selling and administrative The company expects the same costs as last year will incur for the current year. Required: f. The sales manager is convinced that a 10% reduction in the selling price, combined with a RM30,000 increase in advertising, would cause annual sales in units to increase by one third (1/3). i. Calculate the new break-even point (in units) and net operating income. ii. Would you recommend that the company do as the sales manager suggests?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter11: Performance Evaluation And Decentralization

Section: Chapter Questions

Problem 39E: (Appendix 11A) Manufacturing Cycle Efficiency Kurena Company provided the following information on...

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(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.
Question iii) Han products manufacturing 40,000 units of part S-9 each year for use of its production line. A this level of activity, the cost per unit for part S-9 is given as follows : DM - $4.60; DL - $12; VMOH $3.60; FMOH $6. An outside supplier has offered to sell 40,000 units of part S-9 each year to Han products for $25 per part. If Han products accepts this offer, the facilities now being used to manufacturing part S-9 could be rented to another company at an annual rental of $80,000. However. Han products has determined that 2/3 of FMOH being applied to part S-9 would continue even if part S-9 were purchased from the outside supplier. Requirement: iii1. Calculate how much profit will increase/decrease if the outside supplier’s offer is accepted.
Question 10.4 Big Machines Corp. has two divisions. Division Y manufactures components that can be sold in the external market place or transferred to Division Z for further processing. The following data relate to Division Y's component product. Variable manufacturing costs/unit $925 Fixed costs/unit at capacity $275 Selling price/unit $1,800 The capacity of the plant is 2,500 units per year. Division Z has offered to purchase 350 units from Division Y at a price of $1,600/unit, which is the market price of the component. The manager of Division Y has refused this offer stating that it would only return a rate of 25.00%, when the divisional target return on sales is 28.00%. The Division Y manager also states that additional fixed costs of $195,000 would be required to produce the 350 units. The corporate required rate of return is 18% of assets and the existing asset base in Division Y is $2,500,000. Required: How many units must Division Y sell in order…
Item 3 Item 3 10 points Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs Variable $ 30 per unit Fixed $ 7,000,000 (per year) Selling and administrative costs for the year Variable $ 770,000 Fixed $ 4,250,000 Production and sales for the year Units produced 100,000 units Units sold 70,000 units Sales price per unit $ 350 per unit 1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.
Graded Discussion #3 _C-V-P AnalysisGreek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00 d)Assuming sales equal to the normal capacity calculated in a) above, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly showing contribution and net…
Problem 9 Comely Products manufactures three products R, S, and T, in a joint Process. For every ten kilos of raw materials input, the output is five kilos of R, three kilos of S, and two kilos of T. During August, 50,000 kilos of raw materials costing P120,000 were processed and completed, with joint conversion costs of P200,000. Conversion costs are to be allocated to the products on the basis of market values. To make the products saleable, further processing which does not require additional raw materials was done at the following costs: Further processing cost Selling Price Product R P30,000 P10.00 Product S P20,000 P12.00 Product T P30,000 P15.00 If all units of Product T are sold, and selling and administrative expenses are 20% of sale, the net income from the sale of Product T is:
Question 2 A company produces two products in three departments. Details are shown below regarding the time per unit required in each department, the available hours in each department and the contribution per unit of each product: Resources Product X Product Y Available hours hours per unit hours per unit Department A 8 10 11,000 Department B 4 10 9,000 Department C 12 6 12,000 Contribution per unit $4 $8 There is unlimited demand for Product X, but demand for Product Y is limited to 600 units per annum. Requirement Determine, using a step-by-step approach, what the optimum production plan is.
QUESTION 4 An organisation manufactures a single product. The following information with regard to the raw material needed in the production process is supplied to you: Normal delivery time: 2.5 weeksMaximum delivery time: 3.5 weeksNormal usage: 52 000 units per yearPurchase price per unit: R8.50Cost of placing an order: R18.00Interest rate: 2% per yearStoring cost per unit: R2.50 Required: Calculate the EOQ. Calculate the re-order point if the organisation does not keep safety stock.
Problem 5 (9-13 min) Sebastian Company produced and sold 50,000 units of product and is operating at 70% of plant capacity. Unit information about its product is as follows: Sales price $70 Variable manufacturing cost $45 Fixed manufacturing cost ($500,000 ÷ 50,000) 10 55 Profit per unit $15 The company received a proposal from a foreign company to buy 10,000 units of Sebastian Company’s product for $50 per unit. This is a one-time only order and acceptance of this proposal will not affect the company’s regular sales. The president of Sebastian Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.…
Problem 9 Comely Products manufactures three products R, S and T, in a joint Process. For every ten kilos of raw materials input, the output is five kilos of R, three kilos of S and two kilos of T. During August, 50,000 kilos of raw materials costing P120,000 were processed and completed, with joint conversion costs of P200,000. Conversion costs are to be allocated to the products on the basis of market values. To make the products saleable, further processing which does not require additional raw materials was done at the following costs: Further processing cost Selling Price Product R P30,000 P10.00 Product S P20,000 P12.00 Product T P30,000 P15.00 Assuming that all units are sold, the gross margin on sales for Product S is
Problem 9 Comely Products manufactures three products R, S and T, in a joint Process. For every ten kilos of raw materials input, the output is five kilos of R, three kilos of S and two kilos of T. During August, 50,000 kilos of raw materials costing P120,000 were processed and completed, with joint conversion costs of P200,000. Conversion costs are to be allocated to the products on the basis of market values. To make the products saleable, further processing which does not require additional raw materials was done at the following costs: Further processing cost Selling Price Product R P30,000 P10.00 Product S P20,000 P12.00 Product T P30,000 P15.00 The unit cost of Product R is (round off to two decimal places if needed)
QUESTION 25 The following data are available for the Eastern Division of Meyers Products, Inc. The company makes and sells a single product. Unit selling price of product $40 Unit variable expense of product $24 Total fixed expenses $560,000 Average operating assets: $3,000,000 How many units must the division sell each year to have an ROI of 16%? A. 65,000 B. 240,000 C. 52,000 D. 80,000 E. 1,300,000