A coat manufacturer wants to build a large factory or a small factory. The profit per coat is estimated as $12. Per year, a small factory's cost is $200,000, with a production capacity of 50,000 coats and a large factory's cost is $450,000, with a production capacity of 100,000 coats. The four levels of manufacturing demand th are considered likely are 30,000, 40,000, 50,000, and 100,000 coats per year. Complete parts (a) through (e). (...) a. Determine the payoffs for the possible levels of production for a small factory. Manufacturing demand (coats per year) Payoff ($) 30,000 40,000 50,000 100,000 (Simplify your answers)

A coat manufacturer wants to build a large factory or a small factory. The profit per coat is estimated as $12. Per year, a small factory's cost is $200,000, with a production capacity of 50,000 coats and a large factory's cost is $450,000, with a production capacity of 100,000 coats. The four levels of manufacturing demand th are considered likely are 30,000, 40,000, 50,000, and 100,000 coats per year. Complete parts (a) through (e). (...) a. Determine the payoffs for the possible levels of production for a small factory. Manufacturing demand (coats per year) Payoff ($) 30,000 40,000 50,000 100,000 (Simplify your answers)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 16MCQ: Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000...

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Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
Consider a factory that produces gear boxes at the annual rate of 12,000. Demand for the gear boxes is 7200 per year. It costs the factory $100,000 for each run, and the holding cost per gear box per year is $500. Compute the factory's optimal average inventory. Round your answer to the nearest whole number.
A company is planning a new product. Market research information suggests that the product should sell 20,000 units at $35.00/unit. The company seeks to make a margin of 20% on sales. It is estimated that the lifetime costs of the product will be as follows: a. Research and development costs $60,000 b. Manufacturing costs $25/unit c. Decommissioning Costs $40,000 What is the Target Cost per unit? What is the original lifecycle cost 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 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?
The big shoe company are planning production for next year. The selling price is $30 per pair, raw materials cost $7.50 and labor $5.50 per pair. Fixed costs are $150,000. Planned production for next year is 12,500 pairs. Required a) Calculate the marginal cost per pair; the absorption cost per pair; the break even point and a break even graph in steps of 100 pairs. The profit or loss is 12,500 pairs are sold. b) Flashsale offers to buy 2,500 pairs of boots at $20 a pair. This is within capacity and fixed costs will stay the same. Please advise the management whether or not to accept the order. c) A manufacturer in Slaka has offered to make the boots for $20 a pair up to 10,000 pairs and $15 a pair above this level. Big shoe would stop production and act as distributers. Fixed costs would fall to $50,000 every year. Advise management of the financial consequences of accepting this offer d) What other issues apart from finance does the Big Shoes Company need to consider?
Sonora, Inc. is launching a new product that it estimates will sell for $95 per unit. Annual demand is estimated to be 98,000 units. Sonora estimates that using its current manufacturing technology, it can manufacture the units for $37 per unit, but if it purchases a new machine, the units can be manufactured for $36 per unit. Sonora has a target profit of 20% return on sales. Under target costing, what is the target cost for the new product?
b. XYZ company produces staplers and other items. The production cost per unit is $8 and the cost of setting up the production line for this is $60. The annual holding cost rate is 30%. The company works 250 days per year. The production rate for this product is 120 per day. If the annual demand is 20,000 units, iii. What is the total production time allocated to this product annually?
An all-wood furniture manufacturer operates 8 hours per day for 340 days per year, and has a demand of 2,000 units per day. There are four production cycles per day. Assume the following: 7,700 units produced per day, holding cost per unit is $5 per year, labor rate to do line set-ups is $13 per hour. With quick set-ups, the production line must be quickly re-organized. What is the target set-up cost? Please round to two decimals and do not include a dollar sign. What is the set-up time in minutes? Please round to the nearest two decimals, and do not write the word "minutes" in your answer just enter your number with the two decimals.
A producer of chairs is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $10000 per month and a variable costs of $1.50 per unit produced. Each item is sold to the retailers at a price that averages $2.10 per unit. a. What volume per month is required to break even? b. What profit would be realized on a monthly volume of 65000 units? c. What volume is needed to obtain a profit of $15000 per month? d. What volume is needed to provide a revenue of $23000 per month
A company is planning a new product. Market research information suggests that the new product will sell 10,000 total units at a price of $21.00 per unit. The company estimates the lifetime costs of the product as follows: Estimated costs Design and development costs: $50,000 Manufacturing costs: End-of-life costs: $10.00 per unit $20,000 The company estimates that if it were to spend an additional $15,000 on design, then manufacturing costs could be reduced. a) What is the target cost of the product if the company seeks a markup of 40% of product Round answer to two decimal places. $ Given the target cost, would you expect the company to launch the product? Yes ✰ b) What is the maximum allowable product manufacturing cost per unit if the company seeks a markup of 40% of the original life-cycle cost? Round answer to two decimal places. $ Using the total life-cycle cost to determine target product cost, would you expect the company to launch the product? No c) Assume the additional…
A company is planning a new product. Market research information suggests that the new product will sell 10,000 total units at a price of $21.00 per unit. The company estimates the lifetime costs of the product as follows: Estimated costs Design and development costs: $50,000 Manufacturing costs: End-of-life costs: $10.00 per unit $20,000 The company estimates that if it were to spend an additional $15,000 on design, then manufacturing costs could be reduced. a) What is the target cost of the product if the company seeks a markup of 40% of product Round answer to two decimal places. $ 15 Given the target cost, would you expect the company to launch the product? Yes + b) What is the maximum allowable product manufacturing cost per unit if the company seeks a markup of 40% of the original life-cycle cost? Round answer to two decimal places. $ 8 Using the total life-cycle cost to determine target product cost, would you expect the company to launch the product? No ✰ c) Assume the…
There are three equally likely states of nature (High, Medium, and Low demand). If the large factory will post profits of $60,000, $25,000, and -$10,000 under these states of nature, respectively, what is the EMV of the factory?