MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 10, Problem 9QS
Signal mistakenly produced 1,000 defective cell phones. The phones cost $60 each to produce. A salvage company will buy the defective phones as they are for $30 each. It would cost Signal $80 per phone to rework the phones. If the phones are reworked, Signal could sell them for $120 each. Assume there is no opportunity cost associated with reworking the phones. Compute the incremental net income from reworking the phones.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Signal mistakenly produced 1,375 defective cell phones. The phones cost $62 each to produce. A salvage company will buy the
defective phones as they are for $35 each. It would cost Signal $82 per phone to rework the phones. If the phones are reworked.
Signal could sell them for $136 each. Signal has excess capacity. Should Signal scrap or rework the phones?
Sales
Rework costs
Income
Increase net income by
Scrap
Rework
Signal mistakenly produced 1,400 defective cell phones. The phones cost $63 each to produce. A salvage company will buy the
defective phones as they are for $33 each. It would cost Signal $88 per phone to rework the phones. If the phones are reworked,
Signal could sell them for $132 each. Signal has excess capacity. Should Signal scrap or rework the phones?
Serap
Rework
Sales
Rework costs
Income
BT&T Corporation manufactures telephones. Recently , the company produced a batch of 600 defective telephones at a cost of $9,000. BT &T can sell these telephones as scrap for $9 each. It can also rework the entire batch at a cost of $6,500 , after which the telephones could be sold for $20 per unit. If BT&T reworks the defective telephones , by how much will its operating income change ?
Chapter 10 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
Ch. 10 - Prob. 1MCQCh. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 1DQCh. 10 - Is nonfinancial information ever useful in...Ch. 10 - What is a relevant cost? Identify the two types of...Ch. 10 - Prob. 4DQCh. 10 - Prob. 5DQ
Ch. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQCh. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Signal mistakenly produced 1,000 defective cell...Ch. 10 - Prob. 10QSCh. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Rory Company has a machine with a book value of...Ch. 10 - Fill in each of the blanks below with the correct...Ch. 10 - Prob. 2ECh. 10 - Goshford Company produces a single product and has...Ch. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Suresh Co. expects its five departments to yield...Ch. 10 - Exercise 23-11 Sales mix A1 Childress Company...Ch. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 1PSACh. 10 - Calla Company produces skateboards that sell for...Ch. 10 - Prob. 3PSACh. 10 - Prob. 4PSACh. 10 - Prob. 5PSACh. 10 - Elegant Decor Companys management is trying to...Ch. 10 - Prob. 1PSBCh. 10 - Prob. 2PSBCh. 10 - Prob. 3PSBCh. 10 - Prob. 4PSBCh. 10 - Prob. 5PSBCh. 10 - Esme Companys management is trying to decide...Ch. 10 - Prob. 10SPCh. 10 - Apple currently chooses to buy (mainly from...Ch. 10 - Prob. 3BTNCh. 10 - Assume that you work for Greebles Department...Ch. 10 - Prob. 5BTNCh. 10 - Prob. 6BTNCh. 10 - Prob. 7BTNCh. 10 - Prob. 8BTNCh. 10 - Prob. 9BTN
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A manufacturing firm is making auto parts. The machine operators do the packaging and fill the shipping boxes. Each box should contain 60 parts, but the operators fill the boxes by eye, so the average parts per box is 63. Each auto part costs $1. The company realizes that they are wasting parts by overfilling the boxes and decides to automate the packaging which reduces the average parts per box to 60. The equipment would cost $65,000 and SL depreciation with 7-year depreciable life and $10,000 salvage value would be used. Cost of maintaining the equipment is $8,000 annually. The firm manufactures 800K auto parts each year. The combined federal and state incremental tax rate is 30%. Assume a 7-year analysis period and MARR of 10%. 1. What is the after-tax present worth? 2. What is the after-tax payback period? (No-return payback period)arrow_forwardCheapo Computers shipped two servers to its biggest client. Four refurbished computers were mistakenly restocked among 11 new systems. If the client receives two new systems, the profit for the company is $10,000; if the client receives one new system, the profit is $9,600. If the client receives two refurbished systems, the company loses $800. What are the expected value and standard deviation of CheapO's profits?arrow_forwardBiggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and costs $0.01 per sheet to print and will last 4 years. The printer will have zero salvage value and will be fully depreciated using straight-line depreciation over its expected life. The tax rate is 21% and the appropriate discount rate is 14%. Biggerstaff Automotive Group prints approximately 22,000 sheets annually and the printing costs are an operating expense of the firm. What is the equivalent annual cost associated with Printer 1?arrow_forward
- Difend Cleaners has been considering the purchase of an industrial dry-cleaning machine. The existing machine is operable for three more years and will have a zero disposal price. If the machine is disposed now, it may be sold for $170,000. The new machine will cost $360,000 and an additional cash investment in working capital of $170,000 will be required. The new machine will reduce the average amount of time required to wash clothing and will decrease labor costs. The investment is expected to net $130,000 in additional cash inflows during the first year of acquisition and $290,000 each additional year of use. The new machine has a three-year life, and zero disposal value. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life. What is the net present value of the investment, assuming the required rate of…arrow_forwardRoad master shocks has 15000 units of a defective product on hand that costs $80,000 to manufacture. The company can either sell this product as is for scrap for $6 per unit or it can sell the product for $9 per unit after reworking the units to correct the defects at a cost of $50,000. What should the company do?arrow_forwardA company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)arrow_forward
- Kingsville plans to buy a street-cleaning machine. A used cleaning vehicle will cost $80,000 and have a $10,000 salvage value at the end of its five year life. A new system with advanced features will cost $160,000 and have a $45,000 salvage value at the end of its five year life. The new system is expected to reduce labor hours compared with the used system. Current street cleaning activity requires the used system to operate 8 hours per day for 20 days per month. Labor costs $50 per hour and MARR is 12% per year. Find the breakeven labor hours for the new system. USE SOLVER FUNCTION IN EXCELarrow_forwardScrambling, Karen has gone back to her original supplier of collars, which thankfully now has a large quantity it can ship to her. These collars cost $0.50 each, and the company can get enough of them to go back and fix the collars on the recently ruined batch, plus put some into the warehouse for a future batch. In order to fix the botched T-shirts, though, Metlock-T will need to incur an extra $2 per shirt in labor costs to carefully remove the bad collars and re-attach the new ones. These reworked shirts should still be salable to retailers at the regular selling price. How much gross margin per unit will Metlock-T generate if it fixes and sells these reworked shirts? (Round answer to 2 decimal places, e.g. 15.25.) Gross margin $ /unitarrow_forwardAngelus Press is considering replacing all of its old cash registers with new ones. The old registers are fully depreciated and have no disposal value and will be sold for $ $50,000. The new registers cost $ 680,000. Because the new registers are more efficient than the old registers, Angelus Press will have annual cost savings from using the new registers in the amount of $140,000, for the first four years and then $ 100,000 for the remaining two years. The registers have a 6-year useful ife, and are depreciated using the straight line method with no disposal value. Angelus Press require a 12% real rate of return. Ignore income taxes Required: Calculate the Net present value and based on your answer state if project should a) be accepted Calculate the Payback period and based on your answer state if project should b) be accepted Calculate the Internal Rate of return and based on your answer state if project should be accepted c) Calculate the Accrual Rate of Return and based on your…arrow_forward
- An auto repair company needs a new machine that will check for defective sensors. The machine has an Initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and Incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)?arrow_forwardWantage Company makes decorative wedding cakes. The company is considering buying the cakes rather than baking them, which will allow it to concentrate on decorating. The company averages 100 wedding cakes per year and incurs the following costs from baking wedding cakes: (Click the icon to view the costs.) Fixed costs are primarily the depreciation on kitchen equipment such as ovens and mixers. Wantage expects to retain the equipment. Wantage can buy the cakes for $24. 11. 12. Should Wantage make the cakes or buy them? Why? If Wantage decides to buy the cakes, what are some qualitative factors that Wantage should also consider? 11. Should Wantage make the cakes or buy them? Why? (For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the cakes in-house.) Difference Make cakes Outsource cakes (make - outsource) Cake costs Variable costs: Direct materials Direct labor Variable manufacturing overhead Purchase cost Total…arrow_forwardTempo Company has 20,000 units of its product that were produced at a cost of $300,000. The units were damaged in a rainstorm. Tempo can sell the units as scrap for $40,000, or it can rework the units at a cost of $76,000 and then sell them for $100,000. If Tempo Company reworks the units, incremental income will be.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Capital Budgeting Introduction & Calculations Step-by-Step -PV, FV, NPV, IRR, Payback, Simple R of R; Author: Accounting Step by Step;https://www.youtube.com/watch?v=hyBw-NnAkHY;License: Standard Youtube License