Sustainability and cost estimation (Learning Objective 2)
SUSTAINABILITY
Moonlight Entertainment is a provider of cable, Internet, and on-demand video services. Moonlight currently sends monthly bills to its customers via the postal service. Because of a concern for the environment and recent increases in postal rates, Moonlight management is considering offering an option to its customers for paperless billing. In addition to saving printing, paper, and postal costs, paperless billing will save energy and water (through reduced paper needs, reduced waste disposal, and reduced transportation needs.) Although Moonlight would like to switch to 100% paperless billing, many of its customers are not comfortable with paperless billing or may not have online access, so the paper billing option will remain regardless of whether Moonlight adopts a paperless billing system or not.
The cost of the paperless billing system would be $288,600 per quarter with no variable costs since the costs of the system are the salaries of the clerks and the cost of leasing the computer system. The paperless billing system being proposed would be able to handle up to 990,000 bills per quarter (more than 990,000 bills per quarter would require a different computer system and is outside the scope of the current situation at Moonlight).
The company has gathered its cost data for the past year by quarter for paper, toner cartridges, printer maintenance costs, and postage costs for its billing department. The cost data are as follows:
Requirements
- 1. Calculate the variable cost per bill mailed under the current paper-based billing system. Use the high-low method.
- 2. Assume that the company projects that it will have a total of 760,000 bills to mail in the upcoming quarter. If enough customers choose the paperless billing option so that 45% of the mailings can be converted to paperless, how much would the company save from the paperless billing system (be sure to consider the cost of the paperless billing system)?
- 3. What if only 40% of the mailings are converted to the paperless option (assume a total of 760,000 bills)? Should the company still offer the paperless billing system? Explain your rationale.
Want to see the full answer?
Check out a sample textbook solutionChapter 6 Solutions
ACCESS IN BB-ACC202
- he Shining Stars primary school was the recent recipient of a technology grant to source and implement a school management system. The school administrator is not technology savvy and therefore sought advice from three of the board members who were knowledgeable in the information systems and technology field. One director advised the administrator to purchase an off-the-shelf solution which would allow the school to get the system configured and up and running in a short period with reasonable costs. The second advised the administrator to invest in the development of a unique system to meet the custom requirements of the school’s administration. He suggested that this would create a closer fit to the school’s needs compared to purchasing software, but will cost more. The third director suggested using an open source solution which would have little if any upfront costs but may take some time to set up. i) Identify the…arrow_forwardC7-73 Calculate breakeven and margin of safety after hotel renovation (Learning Objective 2) Cost-Volume-Profit Analysis 437 This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in chapter 1 (see page 43) for additional background. (The components of the Caesars serial case can be completed in any order.) Caesars Palace® Las Vegas made headlines when it undertook a $75 million renovation. In mid-September 2015, the hotel closed its then-named Roman Tower, which was last updated in 2001, and started a major renovation of the 567 rooms housed in that tower . On January 1, 2016, the newly renamed Julius Tower reopened, replacing the Roman Tower. In addition to renovating the existing rooms and suites in the former Roman Tower, 20 guest rooms were added to the Roman Tower. With the renovation completed, Caesars expects the Julius Tower room rate to average around $149 per night. This increase, a $25 or 20…arrow_forwardIf you are to give your assessment on the value of Artificial Intelligence in business strategy, at what ratio (example: 50% AI, 50% in person) could AI be employed or utilized for online learning? Identify a particular course in your major (Finance) that you think AI will be useful and explain how this will contribute to a better learning experience for students, cost efficiency for students and the school, and safety and human values considerations. Please explain your answer and specify how you will incorporate AI in the course.arrow_forward
- You wish to take an Excel course. You may enroll at one within your school or you may take a community class at the local library. You've gathered the following information to aid in your decision-making process: Costs/Benefits College Course Community Course Cost $4,300 $1,190 Distance to course 0.20 miles (walking distance) 18 miles (driving distance) Timing of course Weekday Weekend Number of meetings 16 8 Qualitative considerations Convenience, quality of instruction Flexibility, brief duration Pretend transportation (gas, mileage, and parking) cost $220 per class session at the library. If you consider solely the cost - including transportation - of each alternative, which would you choose? Multiple Choice College course Community course Both alternatives Neither alternativearrow_forwardP10-53B Determine transfer price at a manufacturer under various scenarios (Learning Objective 4) Assume the Small Components Division of Lang Manufacturing produces a video card used in the assembly of a variety of electronic products. The division's manufacturing costs, and variable selling expenses related to the video card are as follows: Cost per unit Direct materials $ 14.00 Direct labor $ 4.00 Variable manufacturing overhead $ 8.00 Fixed manufacturing overhead (at current production level) $ 9.00 Variable selling expenses $ 10.00 The Computer Division of Lang Manufacturing can use the video card produced by the Small Components Division and is interested in purchasing the video card in-house rather than buying it from an outside supplier. The Small Components Division has sufficient excess capacity with which to make the extra video cards. Because of competition, the market price for this video card is $30 regardless of whether the…arrow_forwardThe Shining Stars primary school was the recent recipient of a technology grant to source and implement a school management system. The school administrator is not technology savvy and therefore sought advice from three of the board members who were knowledgeable in the information systems and technology field. One director advised the administrator to purchase an off-the-shelf solution that would allow the school to get the system configured and up and running in a short period with reasonable costs. The second advised the administrator to invest in the development of a unique system to meet the custom requirements of the school’s administration. He suggested that this would create a closer fit to the school’s needs compared to purchasing software, but will cost more. The third director suggested using an open-source solution which would have little if any upfront costs but may require some customization. The school administrator must decide about which solution to go with.…arrow_forward
- Triad Children's Center(TCC), a non-profit organization, uses relevant cost analysis to determine whether new services are desirable. TCC is looking at adding a new education program for grade school children who are having difficulty with the reading and math skills. The following relevant cost are expected if the program is accepted:arrow_forwardS15-8 Identify ethical standards violated (Learning Objectives 1, 2, & 3) For each of the situations listed, identify the primary standard from the IMA Statement of Ethical Professional Practice that is violated (competence, confidentiality, integrity, or credibility). Refer to Exhibit 1-7 for the complete standard. Chris is asked to prepare the GRI report for the year, but he has not attended GRI training. He decides to muddle his way through the report. George is frustrated because he feels that his company is not moving fast enough to adopt sustainable practices and GRI reporting. He talks to a reporter about some potential environmental fines the company might receive, thinking that if the company is embarrassed publicly, it will move faster on sustainability initiatives. Kayleigh does not disclose that her brother is the president of the consulting firm her organization is hiring for some GRI reporting work. Cynthia is a staff accountant at Briar Industries. Since Briar's GRI…arrow_forwardList the business, technological, and organizational challenges that were addressed throughout the project to implement a new learning management system, and explain the three-sphere model for systems management in your own words. Do not depend on the examples in the textbook.arrow_forward
- Please step by step process. Professor von Nordenflycht presents Dean Kayande with two new proposals for offering a graduate certificate program. Both programs will cost $60,000, for classroom and instructor time. Both programs are projected to have two possible revenue outcomes. Program 1, which focuses on accounting, is projected to have a 50% chance of generating $150,000 in revenue and a 50% chance of generating $100,000 in revenue. Project 2, which focuses on cryptocurrencies, is predicted to have a 62.5% chance of generating $200,000 in revenue or, otherwise, generating no revenue! a. What is the expected value of each program? b. What is the variance of each program?arrow_forwardCase Analysis: Analyze the case and determine if he gain or loss? Show your computation and explain. After graduation from Senior High School, Richard Cruz decided to put up photocopying business because there was none near the vicinity of the school. Students had to walk far just to go to the nearest photocopying center. Richard knew that the demand for photocopying service among high school students was high because teachers often assigned readings and lecture notes that should be photocopied. Richard opened his photocopying business on August 1, 2019. He rented a commercial space located in front of the high school gate for P 5,000 per month. He also borrowed P 50,000 (without interest) from his father to buy a brand-new photocopying machine costing P30,000 and to pay for other start-up expenses. He planned to pay thus P50,000 in four years. From his personal savings, Richard Spent P10,000 for supplies like bond papers, staplers, paper clips, and other supplies that would need in…arrow_forwardSocial Media, Inc. (SMI) has two services for users. To ot!, which connects tuters with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 13,100 20,100 33,200 Revenues $ 1,800,000 $ 1,760,000 $ 3,560,000 Engineering hours 9,300 7,300 16,600 Engineering cost $ 687,750 $ 806,250 $ 1,494,000 Administrative costs $ 1,195,200 Required: a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of users to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service?arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning