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Bristol is developing material standards for her company. The operations manager wants grade A plastic tops because they are the easiest to work with and are the quality the customers want. Grade B will not work because customers do not want the lower grade, and it takes more time to assemble the product than with grade A materials. Bristol calls several suppliers to get prices for the plastic top. All are within $0.10 of each other. Since the company will use millions of the plastic tops, she decides that the $0.10 difference is important. The supplier who has the lowest price is known for delivering late and low- quality materials. Bristol decides to use the supplier who is $0.04 more but delivers on time and at the right quality. This supplier charges $0.52 per plastic top. Each unit of product requires six plastic tops. What is the
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- Moisha is developing material standards for her company. The operations manager wants grade A widgets because they are the easiest to work with and are the quality the customers want. Grade B will not work because customers do not want the lower grade, and it takes more time to assemble the product than with grade A materials. Moisha calls several suppliers to get prices for the widget. All are within $0.05 of each other. Since they will use millions of widgets, she decides that the $0.05 difference is important. The supplier who has the lowest price is known for delivering late and low-quality materials. Moisha decides to use the supplier who is $0.02 more but delivers on time and at the right quality. This supplier charges $0.57 per widget. Each unit of product requires 4 widgets. What is the standard cost per unit for widgets? Round your answer to two decimal places.arrow_forwardBradley Nowell works as a purchaser at Louie Dog Industries. He is in charge of purchasing dog beds from manufacturers. Bradley's mother, seeing an opportunity, starts a dog bed manufacturing company and quickly receives almost all of Louie Dog's orders. In order to fill the orders, Bradley's mother buys low-quality beds from another dog bed supplier and sells those to Louie Dog for a substantial markup. In fact, the price charged to Louie Dog is twice what other manufactures would charge the company. What type of scheme is this? Pay-and-return Non-accomplice vendor Pass-through Inventory-markuparrow_forwardNovak manufactures pre-made scrapbook pages for scrapbookers who don't have time to create their own pages. The clients need only insert their pictures on the pages. It currently sells a child's scrapbook with pre-made pages for $52. Production costs are $22 variable and $10 fixed. The company is considering creating scrapbook kits instead to save labour costs. They are expecting to sell these kits for $44 each and save $9 in variable costs. Prepare an incremental analysis. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -45,000 or parenthesis, e.g. (45,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) $ Kits $ $ Pre-made pages Should the company begin to sell kits or continue to sell pre-made scrapbooks? $ $ Incremental (revenue) and costsarrow_forward
- Santana Rey has found that Business Solutions’s line of computer desks and chairs has become popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Santana has determined that she only has 1,015 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.arrow_forwardSheridan manufactures unpainted furniture for the do-it-yourself market. It currently sells a table for $65. Production costs are $35 variable and $10 fixed. Sheridan is considering staining and sealing the table to sell it for $100. Variable costs to finish each table are expected to be $13, and fixed costs are expected to be $1. Prepare an analysis showing whether Sheridan should sell unpainted or finished tables. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Incremental revenue $ Incremental cost $ Increase (decrease) in contribution margin Sheridan eTextbook and Media process the tables further. Net Income Increase (Decrease) SUPPORTarrow_forwardDavid would like to order special holiday ornaments for his staff of 720 employees. He just found the perfect item clear glass globes with a unique design and material inside. The only issue is that the globes come from a small manufacturer with limited capacity. The manufacturer told David that it could only produce 360 of these ornaments for him without affecting its regular sales. Normally, these ornaments sell for $25.00 each and cost the company $20.00 to make (David does not know the company's cost structure). Included in the $20.00 cost per unit is $2.55 of fixed-MOH and $1.50 of variable-MOH. (a) Your Answer Correct Answer Your answer is correct. How much will operating income change for the small manufacturer if it produces 360 omaments for David and sells them at a special price of $20.00 per unit? (Round per unit calculations to 2 decimal places, eg 15.25 and final answer to 0 decimal places, e.g. 5,125.) Operating income increases (b) eTextbook and Media Solution by $ Your…arrow_forward
- Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All- Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $100. Given its experience, Leno believes the All-Body suit would have the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total costs (a1) Selling price $ eTextbook and Media $29 Save for Later 29 Assume that Leno uses cost-plus pricing, setting the selling price 26% above its costs. What would be the price charged for the All- Body swimsuit? 42 $100 Assistance Used Attempts: 0 of 3 used Submit Answerarrow_forwardWood Creations designs, manufactures, and sells modern wood sculptures. Sally Jensen is an artist for the company. Jensen has spent much of the past month working on the design of an intricate abstract piece. Jim Smoot, product development manager, likes the design. However, he wants to make sure that the sculpture can be priced competitively. Alexis Nampa, Wood's cost accountant, presents Smoot with the following cost data for the expected production of 75 sculptures: $ 8,000 30,000 37,000 33,000 25,000 15,000 Design cost Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Marketing Required: 1. Smoot thinks that Wood Creations can successfully market each piece for $2,400. The company's target operating income is 20% of revenue. a.) Wood Creations has a total capital investment of $240,000. Compute the target percentage of return on investment. b.) Calculate the markup percentage on full cost based on the current cost data. c.)…arrow_forwardEllie now had two offers to think about. Her initial reaction was to turn down the special request for 25,000 brochures at $10 per 100. Especially as she did not believe Tyco would realize any repeat or future business from the customer. She also needed to understand her costs versus the cost offered by the small shop to increase Tyco's printing capacity by outsourcing. Should she tell the small shop about the special order request and let them work it out themselves? They might both get what they needed.arrow_forward
- Salem Electronics currently produces two products: a programmable calculator and a tape recorder. A recent marketing study indicated that consumers would react favorably to a radio with the Salem brand name. Owner Kenneth Booth was interested in the possibility. Before any commitment was made, however, Kenneth wanted to know what the incremental fixed costs would be and how many radios must be sold to cover these costs. In response, Betty Johnson, the marketing manager, gathered data for the current products to help in projecting overhead costs for the new product. The overhead costs based on 30,000 direct labor hours follow. (The high-low method using direct labor hours as the independent variable was used to determine the fixed and variable costs.) All depreciation. The following activity data were also gathered: Betty was told that a plantwide overhead rate was used to assign overhead costs based on direct labor hours. She was also informed by engineering that if 20,000 radios were produced and sold (her projection based on her marketing study), they would have the same activity data as the recorders (use the same direct labor hours, machine hours, setups, and so on). Engineering also provided the following additional estimates for the proposed product line: Upon receiving these estimates, Betty did some quick calculations and became quite excited. With a selling price of 26 and just 18,000 of additional fixed costs, only 4,500 units had to be sold to break even. Since Betty was confident that 20,000 units could be sold, she was prepared to strongly recommend the new product line. Required: 1. Reproduce Bettys break-even calculation using conventional cost assignments. How much additional profit would be expected under this scenario, assuming that 20,000 radios are sold? 2. Use an activity-based costing approach, and calculate the break-even point and the incremental profit that would be earned on sales of 20,000 units. 3. Explain why the CVP analysis done in Requirement 2 is more accurate than the analysis done in Requirement 1. What recommendation would you make?arrow_forwardColumbus Inc. sells a high end hair dryer in a super competitive marketplace. As a result, market research and competitive pressures influence the determination of their selling price. Their marketing department has done a comprehensive analysis and It looks like a price of $57 would be appropriate given the present business environment. The company has a goal of earning $28 on each unit. What is the target unit cost of each hair dryer? Enter your answers without dollar signs or commas.arrow_forwardDanielle 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…arrow_forward
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