Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, only one pot can be fired in the kiln at a time. Information about each model follows: Round $ 130 Sales price Variable cost Firing time $ 46 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Square $ 98 $ 28 Contribution Margin per Unit Contribution Margin per Hour 2.5 hours Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce

Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, only one pot can be fired in the kiln at a time. Information about each model follows: Round $ 130 Sales price Variable cost Firing time $ 46 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Square $ 98 $ 28 Contribution Margin per Unit Contribution Margin per Hour 2.5 hours Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 6CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...

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Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne’s creations, only one pot can be fired in the kiln at a time. Information about each model follows: Square Round Sales price $74 $96 Variable cost $29 $40 Firing time 2.5 hours 3.5 hours Assume that Anne can sell as many pots as she can create but that she is limited as to the number of hours that the kiln can be run.Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot Contribution Margin per Unit Contribution Margin per Hour Which type of pot should Anne produce to maximize her short-term profit? Square Ceramic Pot Round Ceramic Pot Both
Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne’s creations, only one pot can be fired in the kiln at a time. Information about each model follows: Square Round Sales price $71 157 Variable cost $21 101 Firing time 2.5 hrs 3.5 hrs Assume that Anne can sell as many pots as she can create but that she is limited as to the number of hours that the kiln can be run.Compute the contribution margin per unit and contribution margin per hour of firing time. Which type of pot should Anne produce to maximize her short-term profit? Square Ceramic Pot Round Ceramic Pot Both
Olivia sells bookshelves and small tables. It takes 1.25 hours to build a bookshelf and .9 hours to build a small table. The bookshelves have a unit contribution margin of $500 and the small tables have a unit contribution margin of $350. Olivia has been running low on time to build more products. What is her contribution margin per unit of time for the bookshelves? A : $625 B : $400 C : $555 D : $395
Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?
Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory; in other words, a cleaning is started and completed on the same day. Required: 1. Prepare a statement of services produced in good form. 2. What if HHH planned to purchase 30,000 of direct materials? Assume there would be no change in beginning and ending inventories of materials. Explain which line items on the statement of services produced would be affected and how (increase or decrease).
Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory and no finished goods inventory; in other words, a cleaning is started and completed on the same day. HHH expects to sell 15,000 cleanings at a price of 45 each next year. Total selling expense is projected at 22,000, and total administrative expense is projected at 53,000. Required: 1. Prepare an income statement in good form. 2. What if Jean and Tom increased the price to 50 per cleaning and no other information was affected? Explain which line items in the income statement would be affected and how.
Colin OShea 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?
Seda Sarkisian 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. A. What is the cost for the first cake? B. What cost would not be included in the second cake? C. What is the cost of the second cake? D. What would be the total cost of this order if the offer was accepted? E. How much profit will Seda be recording for this special order? F. If your company policy is to always have a 15% profit on all order, would you still accept this order? G. If you would not accept the order, what price would you negotiate?
Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Required: 1. Calculate the prime cost per cleaning. 2. Calculate the conversion cost per cleaning. 3. Calculate the total variable cost per cleaning. 4. Calculate the total service cost per cleaning. 5. What if rent on the office that Jean and Tom use to run HHH increased by 1,500? Explain the impact on the following: a. Prime cost per cleaning b. Conversion cost per cleaning c. Total variable cost per cleaning d. Total service cost per cleaning
Suppose you make a beautiful coffee table out of Jupiter trees. Your materials costhe materials cost for each table is $135. You pay your Craftsman $25 per hour and it takes him 5 hours to complete one table. If you sell those tables for $689 what is your cost of good sold percentage
Wood 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.)…