Gibson Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $83,200 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,540 tents in January and 1,130 tents in February. For the entire year, the company expects to produce 13,000 tents. Required a. As the number of tents inspected increases, does the amount of fixed cost increase, decrease, or stay the same? b. As the number of tents inspected increases, does the fixed cost per unit increase, decrease, or stay the same? c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? d. How much of the expert's salary should be allocated to tents produced in January and February? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How much of the expert's salary should be allocated to tents produced in January and February? Note: Do not round intermediate calculations. Amount Allocated Month January February $ $ 83,200 × 72,320 < Required C Required D >

Gibson Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $83,200 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,540 tents in January and 1,130 tents in February. For the entire year, the company expects to produce 13,000 tents. Required a. As the number of tents inspected increases, does the amount of fixed cost increase, decrease, or stay the same? b. As the number of tents inspected increases, does the fixed cost per unit increase, decrease, or stay the same? c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? d. How much of the expert's salary should be allocated to tents produced in January and February? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How much of the expert's salary should be allocated to tents produced in January and February? Note: Do not round intermediate calculations. Amount Allocated Month January February $ $ 83,200 × 72,320 < Required C Required D >

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter11: Linear Optimization Models

Section: Chapter Questions

Problem 13P: The Silver Star Bicycle Company will manufacture both mens and womens models for its Easy-Pedal...

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Olin Company manufactures and distributes carpentry tools. Production of the tools is in the mature portion of the product life cycle. Olin has a sales force of 20. Salespeople are paid a commission of 7 percent of sales, plus expenses of 35 per day for days spent on the road away from home, plus 0.50 per mile. They deliver products in addition to making the sales, and each salesperson is required to own a truck suitable for making deliveries. For the coming quarter, Olin estimates the following: On average, a salesperson travels 6,000 miles per quarter and spends 38 days on the road. The fixed marketing and administrative expenses total 400,000 per quarter. Required: 1. Prepare an income statement for Olin Company for the next quarter. 2. Suppose that a large hardware chain, MegaHardware, Inc., wants Olin Company to produce its new SuperTool line. This would require Olin Company to sell 80 percent of total output to the chain. The tools will be imprinted with the SuperTool brand, requiring Olin to purchase new equipment, use somewhat different materials, and reconfigure the production line. Olins industrial engineers estimate that cost of goods sold for the SuperTool line would increase by 15 percent. No sales commission would be incurred, and MegaHardware would link Olin to its EDI system. This would require an annual cost of 100,000 on the part of Olin. MegaHardware would pay shipping. As a result, the sales force would shrink by 80 percent. Should Olin accept MegaHardwares offer? Support your answer with appropriate calculations.
The Silver Star Bicycle Company will manufacture both mens and womens models for its Easy-Pedal bicycles during the next two months. Management wants to develop a production schedule indicating how many bicycles of each model should be produced in each month. Current demand forecasts call for 150 mens and 125 womens models to be shipped during the first month and 200 mens and 150 womens models to be shipped during the second month. Additional data are as follows: Last month, the company used a total of 1,000 hours of labor. The companys labor relations policy will not allow the combined total hours of labor (manufacturing plus assembly) to increase or decrease by more than 100 hours from month to month. In addition, the company charges monthly inventory at the rate of 2% of the production cost based on the inventory levels at the end of the month. The company would like to have at least 25 units of each model in inventory at the end of the two months. (Hint: Define variables for production and inventory held in each period for each product. Then use a constraint to define the relationship between these: inventory from end of previous period + produced this period demand this period = inventory at end of this period.) a. Establish a production schedule that minimizes production and inventory costs and satisfies the labor-smoothing, demand, and inventory requirements. What inventories will be maintained and what are the monthly labor requirements? b. If the company changed the constraints so that monthly labor increases and decreases could not exceed 50 hours, what would happen to the production schedule? How much will the cost increase? What would you recommend?
Brahma Industries sells vinyl replacement windows to home improvement retailers nationwide. The national sales manager believes that if they invest an additional $25,000 in advertising, they would increase sales volume by 10,000 units. Prepare a forecasted contribution margin income statement for Brahma if they incur the additional advertising costs, using this information:
Keleher Industries manufactures pet doors and sells them directly to the consumer via their web site. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
Zachary manufacturing company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $121600 per year to inspect completed tents before they are shipped to customers. assume that the company completed 1,530 tents in January and 1,240 tents in February. For the entire year, the company expects to produce 19000 tents. required c) If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? D) How much of the expert's salary should be allocated to tents produced in January and February? If the cost objective is to determine the cost per tent is the expert's salary a direct or an indirect cost?
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,300 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $74. The company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. a) What is the economic order quantity? units (round your response to the nearest whole number).
Danford Company, a manufacturer of farm equipment, currently produces 20,000 units of gas filters per year for use in its lawn-mower production. The costs, based on the previous year's production, are reported below. It is anticipated that gas-filter production will last five years. If the company continues to produce the product in-house, annual direct material costs will increase $3000/year (For example, annual material costs during the first production year will be $63,000.) Direct labor will also increase by $5000/year. However, variable overhead costs will increase at the rate of $2000/year and the fixed overhead will remain at its current level over the next five years. John Holland Company has offered to sell Danford 20,000 units of gas filters for $25 per unit. If Danford accepts the offer, some of the manufacturing facilities currently used to manufacture the filter could be rented to a third party for $35,000 per year. The firm's interest rate is known to be 15%. What is the…
Santa Fe Company, a farm-equipment manufacturer, currently produces 20,000 units of gas filters for use in its lawnmower production annually. The following costs are reported according to the previous year's production: It is anticipated that gas-filter production will last five years. If the company continues to produce the product in-house, annual direct-material costs will increase at a rate of 5%. (For example, the annual direct-material costs during the first production year will be $63,000.) In addition, direct-labor costs will increase at a rate of 6% per year, and variable-overhead costs will increase at a rate of 3% while fixed-overhead costs will remain at the current level over the next five years. Tompkins Company has offered to sell Santa Fe Company 20,000 units of gas filters for $25 per unit. If Santa Fe accepts the offer, some of the facilities currently used to manufacture the gas filters could be rented to a third party at an annual rate of $35,000. In addition,…
Blue Spruce Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10 from an outside vendor. Division A needs 8,200 lamps for the coming year. Division B has the capacity to manufacture 41,000 lamps annually. Sales to outside customers are estimated at 32,800 lamps for the next year. Reading lamps are sold at $12 each. Variable costs are $7 per lamp and include $1 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $65,600. Consider the following independent situations. (a) What should be the minimum transfer price accepted by Division B for the 8,200 lamps and the maximum transfer price paid by Division A? Minimum transfer price accepted by Division B Maximum transfer price paid by Division A $ $ per unit per unit
Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10.10 from an outside vendor. Division A needs 11,100 lamps for the coming year. Division B has the capacity to manufacture 49,600 lamps annually. Sales to outside customers are estimated at 38,500 lamps for the next year. Reading lamps are sold at $12.09 each. Variable costs are $6.87 per lamp and include $1.41 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $75,900. Consider the following independent situations. What should be the minimum transfer price accepted by Division B for the 11,100 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 15.25.) Per unit Minimum transfer price accepted by Division B $_ Maximum transfer…
Flounder Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10 from an outside vendor. Division A needs 9,000 lamps for the coming year. Division B has the capacity to manufacture 45,000 lamps annually. Sales to outside customers are estimated at 36,000 lamps for the next year. Reading lamps are sold at $12 each. Variable costs are $7 per lamp and include $2 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $72,000. Consider the following independent situations.
Nardin Outfitters has a capacity to produce 21,000 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,800 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs The company has received a special order for 2,300 tents at a price of $780 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $63 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Required: a. What is the…