CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
6th Edition
ISBN: 9781264445356
Author: Noreen
Publisher: MCG
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Chapter 12, Problem 12.5E
1.
To determine
Introduction: The utilization rate is the performance indicator that is used to make plans and determine the success of the company. It is used by manufacturing companies. The utilization rate of equipment can be increased by avoiding machine breakdowns and reducing the average setup times.
The utilization rate.
2.
To determine
Introduction: The efficiency rate is the performance indicator that is used to make plans and determine the success of the company. It is used by manufacturing companies. The efficiency rate of equipment can be increased by avoiding minor work stoppages and properly training operators to maintain the machine regularly.
The efficiency rate.
3.
To determine
Introduction: The quality rate is used by the company to determine the percentage of manufacturing time that is truly productive or defect-free. The quality rate of equipment can be improved by minimizing the number of defective units manufactured as a percent of the total units manufactured.
The quality rate.
4.
To determine
Introduction: The overall equipment effectiveness includes utilization rate, efficiency rate, and quality rate. In the other words, the overall equipment effectiveness is used to measure the productivity of equipment in terms of quality, efficiency, and utilization.
The overall equipment effectiveness (OEE).
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Opti Systems manufactures an optical switch that it uses in its final product. Another company has offered
to sell Opti Systems the switch for $19.50 per unit. None of Opti's fixed costs are avoidable.
(Click the icon to view the outsourcing decision.)
Requirement 1. Identify the expected net costs that Opti Systems will incur to acquire 85,000 switches unde
Outsource switches
Facilities
Idle
Switch costs
Make
Variable costs:
Direct materials
Direct labor
Variable manufacturing overhead
Purchase cost
Expected profit contribution from the other
product
Total expected net cost of the optical switches
Make new
product
LO
Opti Systems needs 85,000 optical switches. By outsourcing them, Opti Systems can use its idle
facilities to manufacture another product that will contribute $217,000 to operating income.
Read the requirements.
Data table
4
Make
Outsource
Difference
optical switch optical switch (Make-Outsource)
Variable costs:
$
9.00
$
9.00
5.00
4.00
18.00 $
Direct materials
Direct labor…
Required information
[The following information applies to the questions displayed below.]
Celestial Products, Inc., has decided to introduce a new product, which can be manufactured by either a computer-
assisted manufacturing system or a labor-intensive production system. The manufacturing method will not affect the
quality of the product. The estimated manufacturing costs by the two methods are as follows:
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
Computer-Assisted
Manufacturing System
$
Volume
0.5DLH @ $25.50
0.5DLH @ $16.50
9.00
12.75
8.25
$4,410,000
units
Labor-Intensive
Production System
$
0.8DLH @ $21.00
0.8DLH @ $16.50
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
9.90
16.80
13.20
$2,730,000
The company's marketing research department has recommended an introductory unit sales price of $75.00. Selling
expenses are estimated to be $900,000…
Required information
Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7-
10)
(The following information applies to the questions displayed below.]
Celestial Products, Inc., has decided to introduce a new product, which can be manufactured by either a computer-
assisted manufacturing system or a labor-intensive production system. The manufacturing method will not affect the
quality of the product. The estimated manufacturing costs by the two methods are as follows:
Computer-Assisted
Manufacturing System
8.10
Labor-Intensive
Production System
$
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
9.00
13.20
9.60
$2,280,000
2$
0.5DLH @ $21.00
0.5DLH @ $12.00
10.50 0.8DLH @ $16.50
6.00 0.8DLH @ $12.00
$3,960,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
The company's marketing research department has recommended an…
Chapter 12 Solutions
CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
Ch. 12 - Prob. 12.1QCh. 12 - Prob. 12.2QCh. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Prob. 12.5QCh. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Prob. 1AECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Scorecard Performance Measures LO 12–1, LO...Ch. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Prob. 12.12PCh. 12 - Prob. 12.13PCh. 12 - Prob. 12.14PCh. 12 - Prob. 12.15PCh. 12 - Prob. 12.16PCh. 12 - Prob. 12.17PCh. 12 - Creating a Balanced Scorecard LO 12–4 Ariel Tax...Ch. 12 - Prob. 12.19PCh. 12 - Prob. 12.20PCh. 12 - Prob. 12.21C
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