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- The Rodgers Company makes 27,000 units of a certain component each year for use in one of its products. The cost per unit for the component at this level of activity is as follows: Direct materials. $4.20 Direct labor. $12.00 $5.80 Variable manufacturing overhead. Fixed manufacturing overhead $6.50 ****** Rodgers has received an offer from an outside supplier who is willing to provide 27,000 units of this component each year at a price of $25 per component. Assume that direct labor is a variable cost. None of the fixed manufacturing overhead would be avoidable if this component were purchased from the outside supplier. Assume that there is no other use for the capacity now being used to produce the component and the total fixed manufacturing overhead of the company would be unaffected by this decision. If Rodgers Company purchases the components rather than making them internally, what would be the impact on the company's annual net operating income? Select one: a. $94,500 increase b.…As the newly appointed Controller of Lynbrook, Inc. you have been asked to evaluate several scenarios that management is considering to improve the overall profitability of the company. Lynbrook manufactures and sells a product called a Wren, its only product. The company normally produces and sells 60,000 Wrens each year at a selling price of $32 per unit. The company's unit costs at this level of activity are included below: Direct materials $10.00 Direct labor 4.50 Variable manufacturing 2.30 overhead Fixed manufacturing overhead 5.00 ($300,000 total) Variable selling expenses 1.20 Fixed selling expenses 3.50 ($210,000 total) Total cost per unit $26.50 The CFO of Lynbrook would like your response to the following three (3) independent situations to present to the management team early next week. Situation #1 Assume that Lynbrook has sufficient capacity to produce 90,000 Wrens each year without any increase in fixed manufacturing overhead costs. The company could increase its unit…Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials $ 3.60 Direct labor 10.00 Variable manufacturing overhead 2.40 Fixed manufacturing overhead 9.00 Total cost per part $ 25.00 An outside supplier has offered to sell 30,000 units of part S-6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $80,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?
- Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes 1,000 tires per day with the following resources: Labor: 400 hours per day @ $12.50 per hour Raw material: 20,000 pounds per day @ $1 per pound Energy: $5,000 per day Capital costs: $10,000 per day What is the labor productivity per labor hour for these tires at Lakefront Manufacturing? What is the multifactor productivity for these tires at Lakefront Manufacturing? What is the percent change in multifactor productivity if Fok can reduce the energy bill by $1,000 per day without cutting production or changing any other inputs?k esc Daffy Duct, Inc., has the capacity to produce 12,000 cases of duct tape per year but only produces and sells 10,000 cases at $50 per case. The direct materials equals $150,000, direct labor equals $140,000, and overhead equals $100,000. Sixty percent of the manufacturing overhead is variable. The forty percent of fixed overhead is allocated equally to all products. Dewey, Cheatum & Howe has offered to purchase 1,000 cases but at a reduced price of $40 per case. What is the additional operating income (loss) of accepting this offer? ENTER NEGATIVE NUMBERS WITH A "-" SIGN. DO NOT USE PARENTHESES. EXAMPLE: -1,000 Click Save and Submit to save and submit. Click Save All Answers to save all answers. 7 ! 1 Q A 1 N 2 W S awe #3 X H E D. $ 4 R C olo L % 5 F! MacBook Pro T V 6 G Y & 7 H B * 00 8 U J N 9 к Sa O MGGT Industries manufactures 23,000 units of a particular component each year. The component's annual manufacturing costs for this level of production are: Direct Materials $147,000 Direct Labor $179,000 Variable manufacturing $26,000 overhead Fixed manufacturing $72,000 overhead An outside supplier has offered to produce all 23,000 units of the component for $13 per unit. Additional information: 。 GGT could earn $42,000 per year by renting out its current manufacturing facilities if it purchases the component from the outside supplier. 。 GGT has determined that the fixed manufacturing overhead would be reduced by 70% if they purchase the component from the supplier. Calculate GGT's anticipated total annual financial impact from purchasing the component from the supplier instead of manufacturing it themselves.
- Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 60,000 units per year is: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expense Fixed selling and administrative expense The normal selling price is $21 per unit. The company's capacity is 75,000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales or total fixed costs. $ 5.10 $ 3.80 $ 1.00 $ 4.20 $ 1.50 $ 2.40 Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior…Your Company has the capacity to produce 80,000 units. It produces and sells 70,000 units of a product each year. At this level of activity, Clark Company incurs the following unit costs: Direct materials $18 Direct labor 25 Variable overhead 9 Fixed overhead 10 Variable S&A 7 Fixed S&A 12 A special order for 9,000 units under consideration would require the one-time rental of a special machine. The rental is for $36,000. If the order is accepted, $5 of the variable S&A can be avoided. What is the least amount the company can charge per unit in this special pricing decision? (Think breakeven.) O $61 O $56 O $58 O $59 O $57Fauci Electronix Ltd. is a company that produces 79,200 microwave ovens annually at its factory in California in order to meet expected global demand. To accomplish this, each worker at the plant works 600 hours per quarter (a quarter = 3 months). The labor productivity at this plant is known to be equal to 0.1 microwave ovens per labor-hour. How many workers are employed at the plant?
- Han Products manufactures 40,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per uni for part S-6 is: Direct materials Direct labor Variable manufacturing overhead $ 3.30 12.00 2.70 Fixed manufacturing overhead Total cost per part 6.00 $ 24.00 An outside supplier has offered to sell 40,000 units of part S-6 each year to Han Products for $22 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $90,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? Answer is complete but not entirely correct. Financial advantage $ 8,000 ×David Company produces two types of gears, Gear A and Gear B, with unit contribution margins of $6 and $8, respectively. Each gear must spend time on a special machine. The firm owns five machines that together provide 12,000 hours of machine time per year. Gear A requires 12 minutes of machine time; Gear B requires 24 minutes of machine time. A. What is the contribution margin per hour of machine time for Gear A? Gear B? ______________________________ B. If David faces only the production constraint (12,000 hours of machine time), how many units of Gear A should be produced? Gear B? What is the total contribution margin from this product mix? ______________________________ C. Now suppose that David cannot sell more than 40,000 units of each type of gear. How many units of Gear A should be produced? Gear B? What is the total contribution margin from this product mix? ______________________________Han Products manufactures 23,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials $ 3.70 Direct labor 11.00 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 9.00 Total cost per part $ 26.00 An outside supplier has offered to sell 23,000 units of part S-6 each year to Han Products for $22 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $73,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?