Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 10, Problem 8PB
Colin O’Shea has a carpentry shop that employs 4 carpenters. Colin received an order for 1,000 coffee tables. The coffee tables have a round table top and four decorative legs. An offer for $500 per table was received. Colin found an unfinished round table top that he could buy for $50 each.
A. Using this quantitative cost data to make the table top, should Colin buy the table top or make it?
B. What qualitative factors would be included in your decision.
B. Can the vendor make it to the same quality standards? Can it be completed on time? Is there idle capacity in the factory that could be used?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Danielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielle’s first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is very intent on purchasing the warehouse because be believes that more storage space is needed. Jerrod asks Danielle into his office and the following conversation takes place:
Jerrod: Danielle, you’re new here, aren’t you?
Danielle: Yes, I am.
Jerrod: Well, Danielle, I’m not at all pleased with capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I don’t get it, where am I going to place out output?
Danielle: Well, we need to get product into our customer’s hands.
Jerrod: I agree, and we need a warehouse to do that.
Danielle: My analysis does not support constructing a new warehouse. The numbers don’t lie; the warehouse does not…
Can some one double check this for me?
You plan to open a small business for manufacturing pet collars, leashes, and harnesses. You have found a workshop space you can use for sewing your products. After some research and planning, you have estimates for the various operating costs for your business.
The total square footage for the sewing rooms is 1,500 square feet broken into three areas (500 square feet each). You have taken out a loan for start-up costs, and the monthly payment is $550; it goes into effect immediately and should be accounted for in your costs. You will also collect a modest salary for the first year of $500 per month; remember to divide evenly among the services.
Salary and Hiring Data
· One collar maker, who will be paid $16.00 per hour and work 40 hours per week
· One leash maker, who will be paid $16.00 per hour and work 40 hours per week
· One harness maker, who will be paid $17.00 per hour and work 40 hours per week
· One receptionist, who will be paid…
You own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the attached image.
a)Compare the ARR for both machines and decide which machine you should buy.
b)Critically evaluate the ARR technique in evaluating investment options.
Chapter 10 Solutions
Principles of Accounting Volume 2
Ch. 10 - ______ are the costs associated with not choosing...Ch. 10 - Which type of incurred costs are not relevant in...Ch. 10 - The managerial decision-making process has which...Ch. 10 - Which of the following is not one of the five...Ch. 10 - Which of the following is sometimes referred to as...Ch. 10 - Jansen Crafters has the capacity to produce 50,000...Ch. 10 - ______ is the act of using another company to...Ch. 10 - Which of the following is a disadvantage of...Ch. 10 - Which of the following is not a qualitative...Ch. 10 - Which of the following is one of the two...
Ch. 10 - When should a segment be dropped? A. only when the...Ch. 10 - Youngstown Construction plans to discontinue its...Ch. 10 - Mallorys Video Supply has changed its focus...Ch. 10 - A company produces two products. E and F in...Ch. 10 - When operating in a constrained environment, which...Ch. 10 - Your roommate at school believes that all fixed...Ch. 10 - Explain how to differentiate short-term decisions...Ch. 10 - Felipes Restaurant and Pie Shop needs help...Ch. 10 - What factors must any company consider before...Ch. 10 - What are some of the qualitative issues that a...Ch. 10 - In The Trouble with Outsourcing, a Schumpeter...Ch. 10 - Many outsourced jobs have resulted in offshoring...Ch. 10 - What type of qualitative issues should management...Ch. 10 - In the decision by a grocery company that is...Ch. 10 - What is of key importance for a company whose...Ch. 10 - What is a general rule to remember with respect to...Ch. 10 - Garrison Boutique, a small novelty store, just...Ch. 10 - Derek DingIer conducts corporate training seminars...Ch. 10 - Bridget Youhzi works for a large firm. Her alma...Ch. 10 - Zena Technology sells arc computer printers for...Ch. 10 - Shelby Industries has a capacity to produce 45.000...Ch. 10 - Reubens Deli currently makes rolls for deli...Ch. 10 - Almond Treats manufactures various types of...Ch. 10 - Party Supply is trying to decide whether or not to...Ch. 10 - Underground Food Store has 4,000 pounds of raw...Ch. 10 - Ralston Dairy gathered this data about the two...Ch. 10 - Rough Stuff makes 2 products: khaki shorts and...Ch. 10 - Rough Stuff makes 2 products: khaki shorts and...Ch. 10 - Ella Maksimov is CEO of her own marketing firm....Ch. 10 - You are trying to decide whether to take a job...Ch. 10 - You are working for a large firm that has asked...Ch. 10 - Dimitri Designs has capacity to produce 30,000...Ch. 10 - Aspen Enterprises makes award pins for various...Ch. 10 - Country Diner currently makes cookies for its...Ch. 10 - Oat Treats manufactures various types of cereal...Ch. 10 - The Party Zone is trying to decide whether or not...Ch. 10 - Berettis Food Mart has 6,000 pounds of raw pork...Ch. 10 - Balcom Dairy gathered this data about the two...Ch. 10 - Power Corp. makes 2 products: blades for table...Ch. 10 - Power Corp. makes 2 products: blades for table...Ch. 10 - Artisan Metalworks has a bottleneck in their...Ch. 10 - Syntech makes digital cameras for drones. Their...Ch. 10 - Marcotti Cupcakes bakes and sells a basic cupcake...Ch. 10 - Ken Owens Construction specializes in small...Ch. 10 - Boston Executive. Inc., produces executive...Ch. 10 - Gent Designs requires three units of part A for...Ch. 10 - Trifecta Distributors has decided to discontinue...Ch. 10 - Extreme Sports sells logo sports merchandise. The...Ch. 10 - Hong Publishing has purchased Lang Publishing....Ch. 10 - Clarion Industries produces two joint products, Y...Ch. 10 - Quality Clothing, Inc., produces skorts and jumper...Ch. 10 - Ac Gems in the Rough, a jewelry company, the...Ch. 10 - Sports Specialists makes baseballs and softballs...Ch. 10 - Variety Artisans has a bottleneck in their...Ch. 10 - Mortech makes digital cameras for drones. Their...Ch. 10 - Cinnamon Depot bakes and sells cinnamon rolls for...Ch. 10 - Myrna White is a mobile housekeeper. The price for...Ch. 10 - Blake Cohen Painting Service specializes in small...Ch. 10 - Regal Executive, Inc., produces executive motor...Ch. 10 - Remarkable Enterprises requires four units of part...Ch. 10 - Colin OShea has a carpentry shop that employs 4...Ch. 10 - ZZOOM, Inc., has decided to discontinue...Ch. 10 - Strawberry Sweet Company makes a variety of jams...Ch. 10 - Laramie Industries produces two joint products, H...Ch. 10 - Jamboree Outfitters, Inc., produces pocket knives...Ch. 10 - Daisy Hernandez sells girls christening dresses...Ch. 10 - Dr. Detail is a mobile car wash. The price for a...Ch. 10 - At Stardust Gems, a faux gem and jewelry company,...Ch. 10 - Sports Butts makes basketballs and footballs in a...Ch. 10 - Seda Sarkisian makes wedding cakes from her home....Ch. 10 - You are a management accountant for Time Treasures...Ch. 10 - Brindis Babysitting Center currently rents a 1200...Ch. 10 - Akimotos Bicycle Co assembles three types of...
Additional Business Textbook Solutions
Find more solutions based on key concepts
E2-13 Identifying increases and decreases in accounts and normal balances
Learning Objective 2
Insert the mis...
Horngren's Accounting (11th Edition)
LO 3, 4 (Learning Objectives 3, 4: Evaluate business operations through financial statements; correct errors; c...
Financial Accounting (12th Edition) (What's New in Accounting)
Would treasury stock be considered authorized, issued, or outstanding? Explain your answer.
Financial Accounting
Discussion Analysis A13-41 Discussion Questions 1. How do managers use the statement of cash flows? 2. Describ...
Managerial Accounting (4th Edition)
Classification of costs, service sector. Market Focus is a marketing research firm that organizes focus groups ...
Cost Accounting (15th Edition)
Define committed costs and provide two examples of committed costs?
Construction Accounting And Financial Management (4th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Danielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielle's first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is intent on purchasing the warehouse because he believes that more storage space is needed. Jerrod asks Danielle to come to his office, where the following conversation takes place: Jerrod: Danielle, you're new here, aren't you? Danielle: Yes, I am. Jerrod: Well, Danielle, I'm not at all pleased with the capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I don't get it, where am I going to place our output? Danielle: Well, we need to get product into our customers' hands. Jerrod: I agree, and we need a warehouse to do that. Danielle: My analysis does not support constructing a new warehouse. The numbers…arrow_forwardJenny's Cupcake Shop and Carrie's Cakes each operate a bakery close to each other in a small town in Florida. If Jenny rents ovens on her own, it will cost $36,000. If Carrie rents ovens on her own, it will cost $52,000. If they consolidate baking operations and share ovens, the total cost will be $66,000. Read the requirements. Requirements 1. Calculate Jenny's and Carrie's respective cost of the shared ovens under the stand-alone cost-allocation method. 2. Calculate Jenny's and Carrie's respective cost of the shared ovens using the incremental cost-allocation method assuming (a) Jenny is the primary party and (b) Carrie is the primary party. 3. Calculate Jenny's and Carrie's respective cost of the shared ovens using the Shapley value method. 4. Which method would you recommend Jenny and Carrie use to share the cost of the ovens? Why? - Xarrow_forwardYou own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the following table: Net Profit Machine 1 (cost $90,000) Machine 2 (cost $110,000) Year 1 $20,000 $10,000 Year 2 $30,000 $20,000 Year 3 $40,000 $40,000 Year 4 $20,000 $60,000 Year 5 $20,000 $50,000 Total $130,000 $180,000 Compare the ARR for both machines and decide which machine you should buy? 2.Critically evaluate the ARR technique in evaluating investment options?arrow_forward
- Alyssa Stuart is thinking of starting a store that specializes in handmade Viennese style bentwood chairs. Before opening her store, Alyssa is curious about how her profit, revenue, and variable costs will change depending on the amount she charges for the chairs. Alyssa would like you to perform the work required for this analysis and has given you the data. Here are a few things to consider while you perform your analysis: Current competitive prices for Viennese style bentwood chairs are between $225 and $275 a chair. Variable costs will be either $100 or $150 a chair depending on the types of material Alyssa chooses to use. Fixed costs are $10,000 a month. Create an Excel file containing the following information: Alyssa's chairs - Price One Alyssa's chairs - Price Two Chair Price $ 225 Chair Price $ 275 Variable Cost per chair $ 125 Variable Cost per chair $ 150 Fixed Cost $ 10,000 Fixed Cost $…arrow_forwardYou own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the following table: Net Profit Machine 1 (cost $90,000) Machine 2 (cost $110,000) Year 1 $20,000 $10,000 Year 2 $30,000 $20,000 Year 3 $40,000 $40,000 Year 4 $20,000 $60,000 Year 5 $20,000 $50,000 Total $130,000 $180,000 a) Compare the ARR for both machines and decide which machine you should buy. b. Critically evaluate the ARR technique in evaluating investment options.arrow_forwardYou own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the following table: Net Profit Machine 1 (cost $90,000) Machine 2 (cost $110,000) Year 1 $20,000 $10,000 Year 2 $30,000 $20,000 Year 3 $40,000 $40,000 Year 4 $20,000 $60,000 Year 5 $20,000 $50,000 Total $130,000 $180,000 a) Compare the ARR for both machines and decide which machine you should buy. [Note: you are supposed to show every step of your calculation and interpret the result.] b) Critically evaluate the ARR technique in evaluating investment options. [Note: remember to use…arrow_forward
- You own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the following table: Net Profit Machine 1 (cost $90,000) Machine 2 (cost $110,000) Year 1 $20,000 $10,000 Year 2 $30,000 $20,000 Year 3 $40,000 $40,000 Year 4 $20,000 $60,000 Year 5 $20,000 $50,000 Total $130,000 $180,000 Compare the ARR for both machines and decide which machine you should buy. [Note: you are supposed to show every step of your calculation and interpret the result.]arrow_forwardYou own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the following table: Net Profit Machine 1 (cost $90,000) Machine 2 (cost $110,000) Year 1 $20,000 $10,000 Year 2 $30,000 $20,000 Year 3 $40,000 $40,000 Year 4 $20,000 $60,000 Year 5 $20,000 $50,000 Total $130,000 $180,000 Compare the ARR for both machines and decide which machine you should buy. [Note: you are supposed to show every step of your calculation and interpret the result.] Critically evaluate the ARR technique in evaluating investment options. [Note: remember to use Harvard referencing to reference your sources]arrow_forwardAssume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs. Required Computation for 10,000 units What amount should have been inccrued if company produce 10,000 units What amount should have been inccrued if company purhcase 10,000 units from outside What amount company save if company make 10,000 cushionsarrow_forward
- Suppose that you have been given a summer job as an Intern at Issac Alrcams, a company that manufactures sophisticated spy cameras for remote-controlled millitary reconnalssance alrcraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financlal statements before approving the loan. Requlred: Classify each cost listed below as elther a product cost or a perlod cost for the purpose of preparing financial statements for the bank. Costs Product Cost or Period Cost 1. Depreciation on salespersons' cars. 2. Rent on equipment used in the factory. 3. Lubricants used for machine maintenance. 4. Salaries of personnel who work in the finished goods warehouse. 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors' salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) 9. Advertising costs.…arrow_forwardPacific Decor, Inc., designs, manufactures, and sells contemporary wood furniture. Ling Li is a furniture designer for Pacific. Li has spent much of the past month working on the design of a high-end dining room table. The design has been well-received by Jose Alvarez, the product development manager. However, Alvarez wants to make sure that the table can be priced competitively. Amy Hoover, Pacific's cost accountant, presents Alvarez with the following cost data for the expected production of 200 tables: Design cost $ 5,000 Direct materials 120,000 Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead 142,000 64,000 46,500 Marketing 15,000 1. Alvarez thinks that Pacific can successfully market the table for $2,000. The company's target operating income is 10% of revenue. Calculate the target full cost of producing the 200 tables. Does the cost estimate developed by Hoover meet Pacific's requirements? Is value engineering needed? 2. Alvarez discovers…arrow_forwardSara makes wedding cakes from her home. A customer has requested two duplicate wedding cakes: one for the wedding and one to be frozen for their anniversary. The couple has offered $400 for both cakes instead of $500 ($250 each). The cost information to make one cake is shown in the image. What is the cost for the first cake? What cost would not be included in the second cake? What is the cost of the second cake? What would be the total cost of this order if the offer was accepted? How much profit will Sara be recording for this special order? If your company policy is to always have a 15% profit on all order, would you still accept this order? If you would not accept the order, what price would you negotiate?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
How to Estimate Project Costs: A Method for Cost Estimation; Author: Online PM Courses - Mike Clayton;https://www.youtube.com/watch?v=YQ2Wi3Jh3X0;License: Standard Youtube License