Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are 4,000,000 p per year. The variable cost of each component is 2,000 p, and the components are sold for 3,000 peach. The company sold 5,000 components during the prior year. (p denotes the peso, Argentina's national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina's peso was worth 0.104 U.S. dollar. In the following requirements, ignore income taxes.) Required:

Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are 4,000,000 p per year. The variable cost of each component is 2,000 p, and the components are sold for 3,000 peach. The company sold 5,000 components during the prior year. (p denotes the peso, Argentina's national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina's peso was worth 0.104 U.S. dollar. In the following requirements, ignore income taxes.) Required:

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

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

See similar textbooks

Similar questions

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?
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?
Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm’s fixed costs are 4,000,000 p per year. The variable cost of each component is 2,000 p, and the components are sold for 3,000 p each. The company sold 5,000 components during the prior year. ( p denotes the peso, Argentina’s national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina’s peso was worth .104 U.S. dollar. In the following requirements, ignore income taxes.)Required: Answer requirements (1) through (4) independently.1. Compute the break-even point in units.2. What will the new break-even point be if fixed costs increase by 10 percent?3. What was the company’s net income for the prior year?4. The sales manager believes that a reduction in the sales price to 2,500 p will result in orders for 1,200 more components each year. What will the break-even point be if the price is changed?5. Should the…
Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm’s fixed costs are 3,600,000 p per year. The variable cost of each component is 1,000 p, and the components are sold for 3,800 p each. The company sold 5,900 components during the prior year. (p denotes the peso, Argentina’s national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina’s peso was worth 0.104 U.S. dollar. In the following requirements, ignore income taxes.)Required:1. Compute the break-even point in units. (Round your answer to the nearest whole number.)2. What will the new break-even point be if fixed costs increase by 10 percent? (Round your answer to the nearest whole number.)3. What was the company’s net income for the prior year?4. The sales manager believes that a reduction in the sales price to 3,300 p will result in orders for 900 more components each year. What will the break-even…
Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 6.60 p per unit. Fixed costs are expected to amount to 56,000 p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 2.00 p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 11 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentina’s national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentina’s peso was worth $0.010 U.S. dollar.) Required: 1. Suppose management alters its current plans by spending an additional amount of 3,300 p on advertising and increases the selling price to 7.60 p per unit. Calculate the profit on 61,000 units.
Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 5.00 p per unit. Fixed costs are expected to amount to 60,000 p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 3.00 p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 10 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentina’s national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentina’s peso was worth .104 U.S. dollar.) Required:1. Suppose management alters its current plans by spending an additional amount of 5,000 p on advertising and increases the selling price to 6.00 p per unit. Calculate the profit on 60,000 units.2. The Sorde Company has just approached Corrientes to make a special one-time purchase of 10,000 units. These units would not be sold by the sales…
Peron Appliances is a Spanish company that is considering moving its manufacturing of dishwashers from Spain to Mexico. It requires three hours of labor to make a dishwasher. In Spain, the cost of each hour of labor is 25 euros. In Mexico, the cost of each hour would be 5 euros. The holding cost per dishwasher per week in Spain is 2 euros, while in Mexico it is 1.5 euros. In Spain, it places orders with the factory weekly and there is a three-week lead time. If production moves to Mexico, the lead time would be 15 weeks. Weekly demand is 500 dishwashers with a standard deviation of 100 dishwashers. It operates with a safety factor of 3. (a) If it keeps production in Spain, on average how many units of inventory will it have on order and on hand?(b) If it moves production to Mexico, on average how many units of inventory will it have on order and on hand? (c) If it keeps production in Spain, what is its holding cost per dishwasher (in euros)?(d) If it moves production to Mexico, what is…
Peron Appliances is a Spanish company that is considering moving its manufacturing of dishwashers from Spain to Mexico. It requires 3 hours of labor to make a dishwasher. In Spain, the cost of each hour of labor is 25 euros. In Mexico, the cost of each hour would be 5 euros. The holding cost per dishwasher per week in Spain is 2 euros, while in Mexico it is 1.5 euros. In Spain, it places orders with the factory weekly and there is a three-week lead time. If production moves to Mexico, the lead time would be 15 weeks. Weekly demand is 500 dishwashers with a standard deviation of 100 dishwashers. It operates with a safety factor of 3. (a) If it keeps production in Spain, on average how many units of inventory will it have on order and on hand? (b) If it moves production to Mexico, on average how many units of inventory will it have on order and on hand? (c) If it keeps production in Spain, what is its holding cost per dishwasher (in euros)? (d) If it moves production to Mexico, what…
Nashville Co. presently incurs costs of about 12 million Australian dollars (A$) per year for research and development expenses in Australia. It sells the products that are designed each year, and all of the products sold each year are invoiced in U.S. dollars. Nashville anticipates revenue of about $20 million per year, and about half of the revenue will be from sales to customers in Australia. The Australian dollar is presently valued at $1 (1 U.S. dollar), but it fluctuates a lot over time. Nashville Co. is planning a new project that will expand its sales to other regions within the United States, and the sales will be invoiced in dollars. Nashville can finance this project with a 5-year loan by (1) borrowing only Australian dollars, or (2) borrowing only U.S. dollars, or (3) borrowing one-half of the funds from each of these sources. The 5-year interest rates on an Australian dollar loan and a U.S. dollar loan are the same. If Nashville wants to use the form of financing that will…
Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.$
Homestead Jeans Co. has an annual plant capacity of 67,000 units, and current production is 45,700 units. Monthly fixed costs are $54,400, and variable costs are $31 per unit. The present selling price is $40 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 19,600 units of the product at $34 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co. Required: A. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is…
A glass company produces paperweights for export. The paperweights were sold at P125 each which does not include shipping cost of P20 per paperweights. These paperweights are then marked-up in Japan of P560 per paperweights. The workers in the factory are paid, on the average, the equivalent of P420 per day and it is estimated that the average daily output per worker is 70 paperweights. The cost of the material is estimated at P44 per paperweigh ts. The fixed cost for the operation is P6M a year. The company operates 288 days a year. 1. What is the break-even point?