to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Purple Tree has received a quote of $60 from a potential supplier for this part. If Purple Tree buys the part, 75 percent of the applied fixed overhead would continue. They need 12,000 units of the specialized part. Purple Tree Company would be better off by Group of answer choices $60,000 to buy the part. $348,000 to buy the part. $30,000 to manufacture
Q: For calendar year 2022, Stuart and Pamela Gibson file a joint return reflecting AGI of $350,000.…
A: Federally declared disaster area after $100 floor (not covered by insurance) (48,600 - 350,000 x…
Q: QUESTION 9 Charla received Preferred Stock as a Nontaxable Common Stock Dividend in 2022 from Marisa…
A: Common stock is the type of stock which represents the ownership of equity in a company. In other…
Q: OR FALSE The P/E ratio relates a company’s reported earnings per share to the market price of its…
A: The P/E ratio stands for Price earnings ratio. Price earnings ratio is arrived at by dividing Market…
Q: Break-even analysis assumes over the relevant range that Group of answer choices total variable…
A: Break-Even point in Units = Fixed cost/Contribution margin per unit
Q: Perform a break-even analysis showing computation of the (a) contribution margin; (b) contribution…
A: Variable Cost :— It is the cost that changes with change in units. It is constant in per unit for…
Q: if a supplier has sold you goods on credit, take us through the process you would go through to get…
A: Creditors In the context of a business or international trade, a firm or other entity that owes…
Q: Timmy Taxes is constructing a new building. Construction costs during the construction period…
A: The four requirements for a capitalized interest are: 1) it was acquired or incurred during the…
Q: Marie Corporation hast the following transactions: 1. Purchased raw materials from supplier…
A: The cost of goods sold includes the total cost of goods that are sold during the period. The gross…
Q: At the beginning of Year 3 Omega Company had a $60,000 balance in its accounts receivable account…
A: Note: Under Direct write off method, bad debts expense are recorded when company is sure that amount…
Q: In divisional income statements prepared for Lemons Company, the Payroll Department costs are…
A: A purchase requisition is a document which an employee fills out to request for the particular items…
Q: Distinguish between the terms tolerable misstatement and preliminary judgment about materiality. How…
A: Material Misstatement: A major mis Statement is information in the financial statements that is…
Q: Morganton Company makes one product and it provided the following information to help prepare the…
A: Given, Budgeted sales for June = 9,000 Budgeted sales for July = 21,000 Budgeted selling price = $65…
Q: Schedule of Cost of Goods Manufactured and Sold The following amounts are available for 2019…
A: COST OF GOODS MANUFACTURED Cost of Goods manufactured include All Direct Cost of Raw Material,…
Q: rey Monson starts a merchandising business on December 1 and enters into the following three…
A: Lets understand the basics. In perpetual inventory system basis, transaction gets recorded on real…
Q: 3. Annual depreciation is $6,000 on buildings and $2,400 on equipment. 4. Unearned rent revenue of…
A:
Q: Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2022. She is 45 years…
A: The term "taxation" refers to the process through which a taxing authority, typically a government,…
Q: d basis in the 1,80
A: Answer : Adjusted basis = (Number of shares * Cost per share) + Commission Gain = Amount realized -…
Q: For the months of January and February, Crane Ltd. recorded cash deposits in its books of $5,300 and…
A: Bank reconciliation statement is prepared by the management at a particular time period. It helps to…
Q: Morganton Company makes one product and it provided the following information to help prepare the…
A: Inventory refers to all the items , goods and materials held by a business for selling in the market…
Q: Clara North is really confused. "I've got three different numbers here and I don't know what is…
A: Clara North has an account with a bank. She has got three different balances. As per her record she…
Q: A seller uses a perpetual inventory system and on April 4 it sells $5,000 in merchandise with a cost…
A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…
Q: Annually, Piper Wines sells 45,000 bottles of wine. The following is the unit sales price and costs:…
A: The Break-even point in units is the number of units to be sold at which the company would incur no…
Q: On January 2, Matthews Corporation acquired 20% of the outstanding common stock of Dennehy Company…
A: Solution : Cost of investment = $450,000 Net income of Dennehy = $90,000 Cash dividend paid by…
Q: Dulaney's Stores has posted the following yearly eamings and expenses Click the icon to view the…
A: Profit Margin :— It is calculated by dividing net income by net sales revenue. Return on Assets…
Q: Peron Company uses a perpetual inventory system and the net method of recording invoices. The…
A: The process of recording business transactions in the books of accounts for the first time is…
Q: Smart Insurance plc is a large life insurance business. Taking the user groups identified, suggest,…
A: Accounting Information System An accounting information system which is described for the benefit of…
Q: Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for…
A: The resources and materials utilized in the creation of a product that may be directly connected to…
Q: . How much is the ending inventory in terms of quantity? a. 621 c. 695 b. 471 d. 74 2. How…
A: FIFO Method :— Under this method, beginning inventory and old purchases is used for output or sales…
Q: George is a U.S. citizen who is employed by Hawk Enterprises, a global company. Beginning on June 1,…
A: The sum of an employee's paycheck that is left over after payroll deductions such as taxes, bonuses,…
Q: Admitting New Partner With Bonus L. Bowers and V. Lipscomb are partners in Elegant Event…
A: A journal entry is used to record a business transaction in the company's accounting records.…
Q: The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning…
A: INCOME STATEMENT Income statement is one of the important financial statements of the Company.…
Q: Bob Thebeau reviewed the records and found the following errors: 1. Cash received from a customer on…
A: Golden Rules of Accounting: Account Debit Credit Personal Accounts The Receiver The…
Q: Wynter Company manufactures and sells a single product. Its budgeted production stands at 25 000…
A: Fixed Cost: Fixed cost is a cost that remains same irrespective of the increase or decrease in the…
Q: Discuss how sunk costs, opportunity costs, side effects, financing costs, and taxes should be…
A: Sunk costs are costs that have already been incurred and thus cannot be recovered. They should be…
Q: The following information relates to Basic Lid. for the year ended 31" December 2021: Net working…
A: Current asset ratio is the liquid ratio which is used to determine the liquidity position of the…
Q: (c) Critically discuss the new strategy developed by Jessica. Use the results of your calculations…
A: SOLUTION :- The new strategy would not be helpful at all for the company, in fact, it would even…
Q: When the overall market experiences a decline of 8%, an investor with a portfolio of aggressive…
A: A high-risk investment is one in which there is either a disproportionately high likelihood of…
Q: The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year…
A: Common shares are those shares which have voting rights. These are the owners of the entity. The…
Q: ABFHRL437 Corporation's info is below: (Baruch College Exam) Sales $843,000 VC $168,600 FC $14,350…
A: Lets understand the basics. Contribution margin is a margin generated from the sales after deducing…
Q: he laboratory manager. The hospital administration wants to penetrate the market and expand the…
A: Budget - A budget is a strategy for making calculations over a specified time period, generally, a…
Q: Morganton Company makes one product and it provided the following information to help prepare the…
A: The budget is prepared to estimate the requirements for the future period. The production budget is…
Q: what are some good features of government accounting?
A: Recording and managing the financial actions of governments at all levels—the Commonwealth, the…
Q: Columbia Products produced and sold 1,200 units of the company's only product in March. You have…
A: Since you have posted q question with multiple sub-parts, we will do the first three sub-parts for…
Q: Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company…
A: Solution: Under variable costing, contribution margin is separately shown based on variable cost. It…
Q: Marina is a 40% partner in a beauty salon and serves as the manager. Under the terms of the…
A: A partnership agreement, which is a contract between the partners of the firm, specifies the terms…
Q: Evan is single and has AGI of $277,300 in 2022. His potential itemized deductions before any…
A: Answer:- Itemized deduction meaning:- The standard deduction cannot be used in place of itemized…
Q: QUESTION 2 Stock valuation The following transactions of Unilever Ghana Limited relate to May 2022.…
A: FIFO Method :— Under this method, beginning inventory and old purchases is used for output or sales…
Q: Adwoa is a business consultant. She provided the following information at the end of her first…
A: Income Statement :— It is one of the financial statement that shows profitability of company during…
Q: A taxpayer is single and has a capital loss of $8,000 long-term for the tax year and a short-term
A: Capital gain - The money one makes when they sell a valuable asset, such as stocks, bonds, or real…
Q: The net effect of the entries to recognize the write-off under the allowance method is to: Multiple…
A: Solution: When accounts receivables is written off using allowance method, allowance for doubtful…
In its production process, Purple Tree Inc uses a specialized part in the manufacturing of their fancy widget. The costs to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Purple Tree has received a quote of $60 from a potential supplier for this part. If Purple Tree buys the part, 75 percent of the applied fixed overhead would continue. They need 12,000 units of the specialized part. Purple Tree Company would be better off by
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $25 per unit and $40 s used in direct labor, while the direct material for the double is $40 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 9,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?Otero Fibers, Inc., specializes in the manufacture of synthetic fibers that the company uses in many products such as blankets, coats, and uniforms for police and firefighters. Otero has been in business since 1985 and has been profitable every year since 1993. The company uses a standard cost system and applies overhead on the basis of direct labor hours. Otero has recently received a request to bid on the manufacture of 800,000 blankets scheduled for delivery to several military bases. The bid must be stated at full cost per unit plus a return on full cost of no more than 10 percent after income taxes. Full cost has been defined as including all variable costs of manufacturing the product, a reasonable amount of fixed overhead, and reasonable incremental administrative costs associated with the manufacture and sale of the product. The contractor has indicated that bids in excess of 30 per blanket are not likely to be considered. In order to prepare the bid for the 800,000 blankets, Andrea Lightner, cost accountant, has gathered the following information about the costs associated with the production of the blankets. Direct machine costs consist of items such as special lubricants, replacement of needles used in stitching, and maintenance costs. These costs are not included in the normal overhead rates. Otero recently developed a new blanket fiber at a cost of 750,000. In an effort to recover this cost, Otero has instituted a policy of adding a 0.50 fee to the cost of each blanket using the new fiber. To date, the company has recovered 125,000. Lightner knows that this fee does not fit within the definition of full cost, as it is not a cost of manufacturing the product. Required: 1. Calculate the minimum price per blanket that Otero Fibers could bid without reducing the companys operating income. 2. Using the full-cost criteria and the maximum allowable return specified, calculate Otero Fibers bid price per blanket. 3. Without prejudice to your answer to Requirement 2, assume that the price per blanket that Otero Fibers calculated using the cost-plus criteria specified is greater than the maximum bid of 30 per blanket allowed. Discuss the factors that Otero Fibers should consider before deciding whether or not to submit a bid at the maximum acceptable price of 30 per blanket. (CMA adapted)
- Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?Rolertyme Company manufactures roller skates. With the exception of the rollers, all parts of the skates are produced internally. Neeta Booth, president of Rolertyme, has decided to make the rollers instead of buying them from external suppliers. The company needs 100,000 sets per year (currently it pays 1.90 per set of rollers). The rollers can be produced using an available area within the plant. However, equipment for production of the rollers would need to be leased (30,000 per year lease payment). Additionally, it would cost 0.50 per machine hour for power, oil, and other operating expenses. The equipment will provide 60,000 machine hours per year. Direct material costs will average 0.75 per set, and direct labor will average 0.25 per set. Since only one type of roller would be produced, no additional demands would be made on the setup activity. Other overhead activities (besides machining and setups), however, would be affected. The companys cost management system provides the following information about the current status of the overhead activities that would be affected. (The supply and demand figures do not include the effect of roller production on these activities.) The lumpy quantity indicates how much capacity must be purchased should any expansion of activity supply be needed. The purchase price is the cost of acquiring the capacity represented by the lumpy quantity. This price also represents the cost of current spending on existing activity supply (for each block of activity). Production of rollers would place the following demands on the overhead activities: Producing the rollers also means that the purchase of outside rollers will cease. Thus, purchase orders associated with the outside acquisition of rollers will drop by 5,000. Similarly, the moves for the handling of incoming orders will decrease by 200. The company has not inspected the rollers purchased from outside suppliers. Required: 1. Classify all resources associated with the production of rollers as flexible resources and committed resources. Label each committed resource as a short- or long-term commitment. How should we describe the cost behavior of these short- and long-term resource commitments? Explain. 2. Calculate the total annual resource spending (for all activities except for setups) that the company will incur after production of the rollers begins. Break this cost into fixed and variable activity costs. In calculating these figures, assume that the company will spend no more than necessary. What is the effect on resource spending caused by production of the rollers? 3. Refer to Requirement 2. For each activity, break down the cost of activity supplied into the cost of activity output and the cost of unused activity.Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
- 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?Man OFort Inc. produces two different styles of door handles, standard and curved. The door handles go through a joint production molding process costing 29,000 per batch and producing 2,000 standard door handles and 1,000 curved door handles at the split-off point. Both door handles undergo additional production processes after the split-off point, but could be sold at that point: the standard style for 4 per door handle and the curved style for 2 per door handle. Determine the amount of joint production costs allocated to each style of door handle using the market value at split-off method.Computador has a manufacturing plant in Des Moines that has the theoretical capability to produce 243,000 laptops per quarter but currently produces 91,125 units. The conversion cost per quarter is 7,290,000. There are 60,750 production hours available within the plant per quarter. In addition to the processing minutes per unit used, the production of the laptops uses 10 minutes of move time, 20 minutes of wait time, and 5 minutes of rework time. (All work is done by cell workers.) Required: 1. Compute the theoretical and actual velocities (per hour) and the theoretical and actual cycle times (minutes per unit produced). 2. Compute the ideal and actual amounts of conversion cost assigned per laptop. 3. Calculate MCE. How does MCE relate to the conversion cost per laptop?
- Andalus Furniture Company has two manufacturing plants, one at Aynor and another at Spartanburg. The cost in dollars of producing a kitchen chair at each of the two plants is given here. The cost of producing Q1 chairs at Aynor is: 75Q1+5Q12+100 and the cost of producing Q2 kitchen chairs at Spartanburg is: 25Q2+2.5Q22+150. Andalus needs to manufacture a total of 40 kitchen chairs to meet an order just received. How many chairs should be made at Aynor, and how many should be made at Spartanburg in order to minimize total production cost?Salley is developing material and labor standards for her company. She finds that it costs $0.55 per pound of material per widget. Each widget requires 6 pounds of material per widget. Salley is also working with the operations manager to determine what the standard labor cost is for a widget. Upon observation, Salley notes that it takes 3 hours in the assembly department and 1 hour in the finishing department to complete one widget. All employees are paid $10.50 per hour. A. What is the standard materials cost per unit for a widget? 8. What is the standard labor cost per unit for a widget?Hawkins Manufacturing Company produces connecting rods for 4- and 6-cylindcr automobile engines using the same production line. The cost required to set up the production line to produce the 4-cylinder connecting rods is 2,000, and the cost required to set up the production line for the 6-cylinder connecting rods is 3,500. Manufacturing costs are 15 for each 4-cylinder connecting rod and 18 for each 6-cylinder connecting rod. There is no production on weekends, so on Friday the line is disassembled and cleaned. On Monday, the line must be set up to run whichever product will be produced that week. Once the line has been set up, the weekly production capacities are 6,000 6-cylinder connecting rods and 8,000 4-cylinder connecting rods. Let x4 = the number of 4-cylinder connecting rods produced next week x6 = the number of 6-cylinder connecting rods produced next week s4 = 1 if the production line is set up to produce the 4-cylinder connecting rods; 0 if otherwise s6 = 1 if the production line is set up to produce the 6-cylinder connecting rods; 0 if otherwise a. Using the decision variables x4 and s4, write a constraint that sets next weeks maximum production of the 4-cylinder connecting rods to either 0 or 8,000 units. b. Using the decision variables x6 and s6, write a constraint that sets next weeks maximum production of the 6-cylinder connecting rods to either 0 or 6,000 units. c. Write a constraint that requires that production be set up for exactly one of the two rods. d. Write the cost function to be minimized.