Calculate the net profit before the introduction of Product C . Calculate the net profit if Cullumber Company introduces Product C
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Calculate the net profit if Cullumber Company introduces Product C
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- Tharp Company operated a small factory in which it manufactures two products: C and D Production and sale results for last year were as follows. C D Unit Sold 9000 20,000 Selling Price $95 $75 VC per unit $0 $40 FC per unit 24 24 For purpose and simplicity, the firm averages total fixed costs over the total number of units of C and D produced and sold. The research department has developed an new product E as a replacement for product D. Market studies show that Tharp Company could sell 10,000 unit of E next year at price of $115. The variable cost per unit of E is $45. The introduction of product E will lead to a 10% increase of demand of product C and a discontinuation of product D. If the company does not introduce the new product, it expects next year's result to be the same as last year's. Should Tharp Company should introduce Product E next year? Explain why or why not. Show your calculations clearly.Roland Company operates a small factory in which it manufactures two products: A and B. Production and sales result for last year were as follow: A B Units sold 8,000 16,000 Selling price per unit 65 52 Variable costs per unit 35 30 Fixed costs per unit 15 15 For purposes of simplicity, the firm allocates total fixed costs over the total number of units of A and B produced and sold. The research department has developed a new product (C) as a replacement for product B. Market studies show that Roland Company could sell 11,000 units of C next year at a price of $80, the variable costs per unit of C are $39. The introduction of product C will lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new product, it expects next year’s result to be the same as last year’s. Instructions Should Roland Company introduce product C next year? Explain why or why not. Show calculations to support your decisionCullumber Company operates a small factory in which it manufactures two products: C and D. Production and sales results for last year were as follows. Units sold Unit selling price Unit variable costs Unit fixed costs C 9,000 19,800 $94 $75 49 20 D Net profit with products C & D 41 For purposes of simplicity, the firm averages total fixed costs over the total number of units of C and D produced and sold. The research department has developed a new product (E) as a replacement for product D. Market studies show that Cullumber Company could sell 11,000 units of E next year at a price of $115; unit variable costs of E are $40. The introduction of product E will lead to a 11% increase in demand for product C and discontinuation of product D. If the company does not introduce the new product, it expects next year's results to be the same as last year's. Compute company profit with products C & D and with products C & E. $ 20
- Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the sameequipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals$30,000. Parker’s accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Required:1. Compute the number of vases and the number of figurines that must be sold for thecompany to break even.2. Parker Pottery is considering upgrading its factory to improve the quality of its products.The upgrade will add $5,260 per year to total fixed cost. If the upgrade is successful, theprojected sales of vases will be 1,500, and figurine sales will increase to 1,000 units. Whatis the new break-even point in units for each of the products?A company is analyzing a make-versus-purchase situation for a component used in several products, and the engineering department has developed these data:Option A: Purchase 10,000 items per year at a fixed price of $8.50 per item. The cost of placing the order is negligible according to the present cost accounting procedure. Option B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials = $5.00 per item and direct labor = $1.50 per item. Manufacturing overhead is $3.00 per item. Based on these data, should the item be purchased or manufactured?Company XYZ is conducting an engineering economic analysis to decide whether to make vs purchase position for a necessary element needed ins several products. Now the engineering department has established this information: Option A to purchase 10,000 units annually at a fixed price of $8.50 per unit. The cost of placing the order is insignificant as per the present cost accounting procedure. Option B to manufacture 10,000 units annually with a direct labor cost of $1.50 per unit, manufacturing overhead cost is allotted at 200% of direct labor (which is $3.00 per unit) ) and Direct materials cost at $5.00 per unit. Based on the information, should the unit be purchased or manufactured?
- The Nikki Beat Company operates a small factory in which it manufactures two products, AG and BD. Production and sales results for the last year were as follows: AG BDUnits sold 8,000 20,000Unit selling price $95 $78Unit variable cost 50 45Unit fixed cost 22 22 Fixed costs are spread over the total number of units of AG and BD produced and sold.The research department has developed a new product, CF, as a replacement to product BD.Market studies show that Nikki Beat Company could sell 11,000 units of CF next year at a price of $120; the variable costs per unit of CF are $42. The introduction of product CF will lead to a ten percent increase in demand for product AG and discontinuation of product BD. If the firm does not introduce the new product, the firm expects next year’s results to be the same as last year’s.Required: Prepare a financial…Zumsteg Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump. Date concerning that pump appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 72,800 #106 70.0 $20 The company has a Pool Products Division that could use this pump in one of its products. The Pool Products Division is currently purchasing 8,800 of these pumps per year from an overseas supplier at a cost of $99 per pump. Required: Assume that the Pump Division has enough Idle capacity to handle all of the Pool Products Division's needs. What is the acceptable ange, If any, for the transfer price between the two divisions? Note: Round your answers to 1 decimal place.alshetem 2. A company is analyzing a make-versus-purchase situation for a component used in several products, and the engineering department has developed these data: ion A: Purchase 10,000 items per year at a fixed price of $8.50 per item. The cost of placing the order is negligible according to the present cost accounting procedure. ion B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials $5.00 per item and direct labor = $1.50 per item. Manufacturing overhead is $3.00 per item. Based on these data, should the item be purchased or manufactured? poge buopoa eotoriq 1elted not qge a bsolqu 10 (80lorig ni
- Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Direct materials Direct labor Variable overhead Fixed manufacturing costs (a) Crane' market research department has recommended an introductory unit sales price of $40.00. The selling expenses are estimated to be $622,000 annually plus $2.00 for each unit sold, regardless of manufacturing method. (b) Capital-Intensive $6.00 per unit $7.00 per unit $4.00 per unit Your answer is correct. $3,200,000 Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses the: 1. Capital-intensive manufacturing method. 2. Labor-intensive manufacturing method. Break-even point in units eTextbook and Media Labor-Intensive $7.00 per unit $10.00 per unit $5.50 per unit…A company is analyzing a make-versus-purchase situation for a component used in several products and the engineering department has developed these data: Option A: Purchase 10,000 items per year at a fixed cost of Php 340 per item. The cost of placing the order is negligible according to the present cost accounting procedure. Option B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials= Php 200 per item and direct labor = Php 60 per item. Manufacturing overhead is allocated at 200% of direct labor. Based on these data, should the item be purchased or manufacture?Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
