Answer the following questions.1. Dalton Computers makes 5,500 units of a circuit board, CB76 at a cost of $250 each. Variable cost per unit is $170 and fixed cost per unit is $80. Peach Electronics offers to supply 5,500 units of CB76 for$230. If Dalton buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $65 per unit. Should Dalton accept Peach's offer? Explain.2. TX Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:(Click the icon to view the information.)TX Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should TX Manufacturing replace the old machine? Explain.Relevant COSIS.Variable costs per unitAvoidable fixed costs per unitPurchase price per unitUnit relevant costCash operating costsCurrent disposal value of old machineCost of new machine$Total relevant costs17015$185 $230230Dalton Computers should reject Peach's offer. When comparing relevant costs between the choices, Peach's offer price is higher than the cost to continue to produce.2. TX Manufacturing is deciding whether to keep or replace an old machine. TX Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should TX Manufacturingreplace the old machine? Explain.Begin by calculating the total relevant costs. (If an input field is not used in the table, leave the input field empty; do not enter a zero. Use parentheses or a minus sign for numbers to be subtracted.)DifferenceKeepReplaceC---

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Holiday Corporation has two divisions, Quail and Marlin. Quail produces a widget that Marlin could use in its production. Quail's variable costs are $4.30 per widget while the full cost is $7.30. Widgets sell on the open market for $12.60 each. If Quail has excess capacity, what would be the minimum transfer price if Marlin currently is purchasing 115,000 units on the open market? Multiple Choice $5.30 $4.30 $12.60 $7.30
Radar Company sells bikes for $520 each. The company currently sells 4,300 bikes per year and could make as many as 4,620 bikes per year. The bikes cost $265 each to make: $170 in variable costs per bike and $95 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 320 bikes for $500 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Per Unit Total Contribution margin Income (b) The company should
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Patsy Smith is planning to sell her special knife for $15 per unit. She purchases units from alocal distributor for $6 each. She can return any unsold units for a full refund. Fixed costs forbooth rental, including lighting and security are $4500. Required a) Compute the breakeven point in units sold. b) Suppose the unit purchased is $5 instead of $6, the fixed cost increases by $500, butthe selling price is unchanged. Compute the new breakeven point in units sold. c) Using the above data, explain how cost behavior affects Patsy Smith’s decision-making?
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A truck manufacturer can produce one more truck if it hires another employee for $40,000. It can also produce one more truck if it buys $50,000 worth of machinery. A truck sells on the market for $60,000. The truck manufacturer should a. Hire employees until the cost of the next employee equals the cost of buying machinery to produce another truck b. Buy machinery until the cost of buying machinery to produce another car equals the cost of hiring another employee С. Sell machinery and lay off employees d. Lay off employees and buy machinery e. None of the above
The Arthur Company manufactures kitchen utensils. The company is currently producing well below its full capacity. The Benton Company has approached Arthur with an offer to buy 17,000 utensils at $0.85 each. Arthur sells its utensils wholesale for $0.96 each; the average cost per unit is $0.91, of which $0.10 is fixed costs. If Arthur were to accept Benton's offer, what would be the increase in Arthur's operating profits? Multiple Choice O O $850. $1,020. $680. $1,870.
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Answer the following questions. 1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $30 per unit. Should Douglas accept Peach's offer? Explain. 1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $30 per unit. Should Douglas accept Peach's offer? Explain. Begin by calculating the relevant cost per unit. (If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Relevant costs: Unit relevant cost Douglas…
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Big Seats has the capacity to produce 100,000 sofas per year but only produces 80,000 sofas per year. The sale price is $1,000 each. Direct materials equals $100 per sofa, direct labor equals $200 per sofa, and allocated overhead equals $100,000 per year. Buy & Large offers to buy an additional 2,000 sofas but is only willing to pay $800 per sofa. What is the additional operating income (loss) of accepting the offer? ENTER NEGATIVE NUMBERS WITH A "_" SIGN. DO NOT USE PARENTHESES. EXAMPLE: -1000

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