S1: Cost plus contract is a contract used on long term construction contracts in which the contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit of output, which in some cases may be subject to cost escalation clauses.S2: Variable contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee S1 True; S2 False Both are true Both are false S2 True; S1 False

S1: Cost plus contract is a contract used on long term construction contracts in which the contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit of output, which in some cases may be subject to cost escalation clauses.S2: Variable contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee S1 True; S2 False Both are true Both are false S2 True; S1 False

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 32P

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Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
S1: Cost plus contract is a contract used on long term construction contracts in which the contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit of output, which in some cases may be subject to cost escalation clauses. S2: Variable contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee. S2 True; S1 False S1 True; S2 False Both are false Both are true
S1: Cost plus contract is a contract used on long term construction contracts in which the contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit of output, which in some cases may be subject to cost escalation clauses. S2: Variable contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee. A. S2 True; S1 False B. S1 True; S2 False C. Both are false D. Both are true
S1: Cost plus contract is a contract used on long term construction contracts in which the contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit of output, which in some cases may be subject to cost escalation clauses.S2: Variable contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee * A. Both are true B. S2 True; S1 False C. Both are false D. S1True; S2 False
Suppose that a firm has the option to make or buy a part. Its annual requirement is 11,000 units. A supplier is able to supply the part at $6 per unit. The firm estimates that it costs $800 to prepare the contract with the supplier. To make the part, the firm must invest $29,000 in equipment, and the firm estimates that it costs $3 per unit to make the part. COSTS MAKE OPTION BUY OPTION Fixed Cost $29,000 $800 Variable Cost $3 $6 Annual Requirement = 11,000 units 1. What is the break-even point? Round your answer to the nearest whole number. 2. What is the total cost at the break-even point? Round your answer to the nearest dollar. 3. What is the total cost for the make option? Round your answer to the nearest dollar.
Relevant Cost Exercises Each of the following situations is independent:a. Make or Buy Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Waltersis considering an offer from a subcontractor to provide 2,000 units of product OP89 for $120,000.If Terry does not purchase these parts from the subcontractor, it must continue to produce themin-house with these costs:[LO 11-1, 11-2, 11-3,11-4, 11-7]Cost per UnitDirect materials $28Direct labor 18Variable overhead 16Allocated fixed overhead 4Required1. What is the relevant cost (per unit, rounded to 2 decimal places) to make the product internally?2. What is the estimated increase or decrease in short-term operating profit of producing the productinternally versus purchasing the product from a supplier? (Round your answer to nearest whole dollar.)3. What strategic considerations likely bear on this make-vs.-buy decision?
Mr Price, has no debt outstanding and a total market value of R150,000. Earnings before interest and taxes [EBIT] are projected to be R14,000 if economic conditions are normal. If there is a strong expansion in the economy, then EBIT will be 30% higher. If there is a recession, then EBIT will be 60% lower. Mr Price is considering a R60,000 debt issue with a 5% interest rate. The proceeds will be used to repurchase shares of stock. There are currently 2,500 shares outstanding. Ignore taxes for this problem. Assuming that Mr Price goes through with recapitalization. Calculate the % changes in EPS when the economy enters a recession
State whether the following contracts are considered leases under PFRS 16. Why or why not? 1. Customer enters into a contract with an aircraft owner (supplier) for the use of an explicitly specified aircraft for a two year-period. The contract details the interior and exterior specifications for the aircraft. 2. Customer enters into a contract with a manufacturer (supplier) to purchase a particular type, quality and quantity of shirts for a three-year period.
1. How does the type of contract influence the format of the payment request? 4. What type of data is submitted to support a payment request on a lump sum contract? 5. What is retention? What is it used for?
You are the buyer for a major U.S. health care company. As buyer, your job is to procure and buy parts for the production of X-Ray machines. The buyer from your sister plant in Paris, France has contacted you to supply them with 5 center sections, (a major component used in the X-Ray tube), because they will run out of these parts within 3 days. The center section is procured from a single source supplier in England, weighs approximately 40 pounds, is made of lead and has a 6-week lead time, (the time your supplier requires to manufacture the center section). Based on this criterion, answer the following questions: What mode of transportation is appropriate for shipping this part to Paris, France? What carrier will you use? Which carrier offers the best value?
Mr. Peter, of PM Enterprises, has an ice cream manufacturing facility located in downtownJohannesburg. Due to the covid-19 pandemic, his core supplier failed to deliver the contracted rawmaterials to the company. This has resulted in Mr. Peter searching for a core new supplier.In searching for a core new supplier, he needs assistance in improving his negotiations skills. Help Mr.Peter to understand how to better his negotiations skills by answering the following questions. Q.1.1. There are various circumstances under which negotiations take place.discuss any three of these circumstances in relation to Mr. Peter and his core supplier.