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(1)
Concept introduction:
Just-in-time (JIT) stock system is a trick that producers make use to lift effectiveness and reduce waste by accepting goods only as they are required in the manufacturing process, thereby dipping the cost of inventory.
The amount G can reduce its level of stock to match A’s system of maintaining a stock equal to 10% of succeeding month sales.
(2)
Concept introduction:
Just-in-time (JIT) stock system is a trick that producers make use of to lift effectiveness and reduce waste by accepting goods only as they are required in the manufacturing process, thereby dipping the cost of inventory.
To explain:
Analysis of closing stock level for 30% and 10% require stock policies in justifying ‘just in time’ stock system.
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Chapter 7 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its products from those of its competitors. Because of this strategy, you project that next year the firm will generate 6.0% revenue growth from price increases and 3.0% revenue growth from sales volume increases. Assume that the firms production cost structure involves strictly variable costs. (That is, the cost to produce each unit of product remains the same.) Should you project that the firms gross profit will increase next year? If you project that the gross profit will increase, is the increase a result of volume growth, price growth, or both? Should you project that the firms gross profit margin (gross profit divided by sales) will increase next year? If you project that the gross profit margin will increase, is the increase a result of volume growth, price growth, or both?arrow_forwardBaker Company has a product that sells for $20 per unit. The variable expenses are $12 per unit, and fixed expenses total $30,000 per year. Compute for the following:c. If total sales increase by $20,000 and fixed expenses remain unchanged, by how much would net operating income be expected to increase?d. The marketing manager wants to increase advertising by $6,000 per year. How many additional units would have to be sold to increase overall net operating income by $2,000?arrow_forward4.) refer to the orginal data. Compute the company's margin of safety in both dollar and percentage terms. 5.) what is the company's CM ratio? If the company can sell more units thereby increasing sales by $50000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?arrow_forward
- 1. What is the margin of safety in peso value? 2. What is the margin of safety in units? 3. If the company wishes to increase its total peso value contribution margin by 40% in 2021, by how much will it need to increase its sales if all other factors remain constant?arrow_forwardGreek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. $50.00 Selling price per unit.. Production Costs: Direct Materials $10.00 Direct Labour $8.00 Variable Manufacturing Overhead Fixed Manufacturing Overhead.. $7.00 $450,000 $300,000 Fixed Selling & Administrative Expenses.. Variable selling expense per unit . $10.00 Required:arrow_forwardCarrolton, Inc., currently sells widgets for $80 per unit. The variable cost is $30 per unit, and total fixed costs equal $220,000 per year. Sales are currently 15,000 units annually. The company is considering a 15% drop in selling price that it believes will raise units sold by 25%. Assuming all costs stay the same, what is the impact on income if this change is made? Explain your answer.arrow_forward
- Both Apple and Google sell electronic devices, and each of these companies has a different product mix. Assume the following data are available for both companies. ($ millions) Sales Variable costs Fixed costs Apple $ 260,174 122,034 82,884 Required: 1. Compute income for each company. 2. Compute the degree of operating leverage for each company. 3. If unit sales decline, which company would experience the larger decline in income? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Google $ 161,857 86,302 41,212 Income Compute income for each company. (Enter your answers in million of dollars.) Apple Googlearrow_forwardJB Hunt Corp. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of net 35 days with cost of the good sold $180,000 per day. The firm is searching for ways to shorten the cash conversion cycle. If sales and cost of the good sold can be maintained at existing levels while lowering inventory conversion cycle by 20 days, lowering average collection period by 22 days and postponing its payable to 40 days, calculate the Exodus increase in its free cash flow after the change in its cash conversion cycle.(Please show work)arrow_forwardPeform a sensitivity analysis by answering the following questions: A. What is the break-even point in sales dollars for RBC? B. What is the margin of safety for RBC? C. What sales dollars would be required to achieve an operating profit of $170,000? $440,000?arrow_forward
- Berries Salad has current sales of RM10,000 and a profit margin of 5%. The firm estimates that sales will increase by 4% next year and all costs will vary directly with sales. What is the pro forma net income? Select one: a. RM500.00 b. RM420.00 c. RM405.60 d. RM520.00arrow_forwardAtech has fixed costs of $7 million and profits of $4 million. Its competitor, ZTech, is roughly the same size and this year earned the same profits, $4 million. However, ZTech operates with fixed costs of $5 million and lower variable costs.a. Which firm has higher operating leverage?b. Which firm will likely have higher profits if the economy strengthens?arrow_forwardCarrolton, Inc. currently sells widgets for $80 per unit. The variable cost is $30 per unit and total fixed costs equal $240,000 per year. Sales are currently 20,000 units annually. The company is considering a 20% drop in selling price that it believes will raise units sold by 20%. Assuming all costs stay the same, what is the impact on income if this change is made?arrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
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