Please see the attachment, thank you! Cheers! 6.5. The Audiofile Company produces boomboxes. However, management has decided to subcontract out the production of the speakers needed for the boomboxes. Three vendors are available to supply the speakers. Their price forPage 232each shipment of 1,000 speakers is shown below.VendorPrice1$22,500222,700322,300Each shipment would go to one of the company's two warehouses. In addition to the price for each shipment, each vendor would charge a shipping cost for which it has its own formula based on the mileage to the warehouse. These formulasand the mileage data are shown below.VendorCharge per ShipmentWarehouse 1Warehouse 21$300 + 40¢/mile1,600 miles400 miles2$200 + 50¢/mile500 miles600 miles3$500 + 20¢/mile2,000 miles1,000 milesWhenever one of the company's two factories needs a shipment of speakers to assemble into the boomboxes, the company hires a trucker to bring the shipment in from one of the warehouses. The cost per shipment is given next, along with thenumber of shipments needed per month at each factory.Unit Shipping CostFactory 1 Factory 2Warehouse 1$200$700Warehouse 2400500Monthly demand106Each vendor is able to supply as many as 10 shipments per month. However, because of shipping limitations, each vendor is only able to send a maximum of six shipments per month to each warehouse. Similarly, each warehouse is only able tosend a maximum of six shipments per month to each factory.Management now wants to develop a plan for each month regarding how many shipments (if any) to order from each vendor, how many of those shipments should go to each warehouse, and then how many shipments each warehouse shouldsend to each factory. The objective is to minimize the sum of the purchase costs (including the shipping charge) and the shipping costs from the warehouses to the factories.c. Formulate and solve a spreadsheet model for the company's problem.

Answered: $22,500 22.700 22,300 |go to one of the…

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Accounting

$22,500 22.700 22,300 |go to one of the company's two warehouses. In add

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 31P: Jonfran Company manufactures three different models of paper shredders including the waste...

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Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)
Baird Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. $ 6,500 6,400 4,100 9,600 27,900 Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Baird for $2.60 each. Required a. Calculate the total relevant cost. Should Baird continue to make the containers? b. Baird could lease the space it currently uses in the manufacturing process. If leasing would produce $11,200 per month, calculate the total avoidable costs. Should Baird continue to make the containers? a. Total relevant cost Should Baird continue to make the containers? b. Total avoidable cost Should Baird continue to make the containers?
Micron Manufacturing produces electronic equipment. This year, it produced 7,500 oscilloscopes at a manufacturing cost of $300 each. These oscilloscopes were damaged in the warehouse during storage and, while usable, cannot be sold at their regular selling price of $500 each. Management has investigated the matter and has identified three alternatives for these oscilloscopes. 1. They can be sold as is to a wholesaler for $75 each. 2. They can be disassembled at a cost of $400,000 and the parts sold to a recycler for $130 each. 3. They can be reworked and turned into good units. The cost of reworking the units will be $3,200,000, after which the units can be sold at their regular price of $500 each. Required Which alternative should management pursue? Show analysis for each alternative.
4 Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,000 sails per year. The following information relates to current production. If a special sales order is accepted for 4,500 sails at a price of $120 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs per unit: Manufacturing Marketing and administratrve $60 $20 Total fixed costs: Manufacturing Marketing and administrative $600,000 S200,000 Increase by $160,000 ) Increase by $150,000 ) Increase by $140,000 Increase by S170,000 ) Increase by S180,000 ()
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
Finn Enterprises manufactures ceiling fans that normally sell for $92 each. There are 320 defective fans in inventory, which cost $60 each to manufacture. These defective units can be sold as is for $20 each, or they can be processed further for a cost of $42 each and then sold for the normal selling price. Stooge Enterprises would be better off by a OA $23,040 not increase in operating income if the ceiling fans are repaired. OB. $9.600 net increase in operating income if the ceiling fans are repaired OC. $23,040 net increase in operating income if the ceiling fans are sold as is OD. $9,600 net increase in operating income if the ceiling fans are sold as is.
Finch Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,400 6,000 4,000 11,400 27,300 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Finch for $2.70 each. Required a. Calculate the total relevant cost. Should Finch continue to make the containers? b. Finch could lease the space it currently uses in the manufacturing process. If leasing would produce $11,000 per month, calculate the total avoidable costs. Should Finch continue to make the containers? a. Total relevant cost Should Finch continue to make the containers? b. Total avoidable cost Should Finch continue to make the containers?
A company is negotiating with a potential supplier for the purchase of 100,000 widgets. The company estimates that the supplier’s variable costs are $5 per unit andthat the fixed costs, depreciation, overhead, and so on, are $50,000. The supplierquotes a price of $10 per unit. Calculate the estimated average cost per unit. do youthink $10 is too much to pay? Could the purchasing department negotiate a betterprice? How?
Jordan electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly costs of producing 9,100 containers follow Unit-level material $6,000 Unit-level labor $6,700 unit-level overhead $3,300 product-level costs* $11,700 Allocated facility-level costs $26,500 *one-third of these costs can be avoided by purchasing the containers. Russo container company has offered to sell comparable containers to Jordan for $2.80 each. Required a) Calculate the total relevant cost should Jordan continue to make the containers. b) Jordan could lease the space it currently uses in the manufacturing process if leasing would produce $11,700 per month, and calculate the total avoidable costs. Should Jordan continue to make the containers? a) Total relevant cost should Jordan continue to make the containers? Total avoidable cost Should Jordan continue to make the containers?
Perez Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials $ 6,000 6,900 3,600 8,400 26,500 Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Perez for $2.80 each. Required a. Calculate the total relevant cost. Should Perez continue to make the containers? b. Perez could lease the space it currently uses in the manufacturing process. If leasing would produce $12,800 per month, calculate the total avoidable costs. Should Perez continue to make the containers? a. Total relevant cost Should Perez continue to make the containers? b. Total avoidable cost Should Perez continue to make the containers?
Campbell Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,900 6,400 4,100 9,600 26,600 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Campbell for $2.80 each. Required a. Calculate the total relevant cost. Should Campbell continue to make the containers? b. Campbell could lease the space it currently uses in the manufacturing process. If leasing would produce $12,800 per month, calculate the total avoidable costs. Should Campbell continue to make the containers? a. Total relevant cost Should Campbell continue to make the containers? b. Total avoidable cost Should Campbell continue to make the containers?
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $148 per unit (100 bottles), including fixed costs of $33 per unit. A proposal is offered to purchase small bottles from an outside source for $95 per unit, plus $11 per unit for freight. a. Prepare a differential analysis dated July 31 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Use a minus sign to indicate a loss. Differential Analysis Make Bottles (Alt. 1) or Buy Bottles (Alt. 2) July 31 Make Bottles (Alternative 1) Buy Bottles (Alternative 2) Differential Effect on Income (Alternative 2) Sales price $fill in the blank 2d4f3efa1ffef7f_1 $fill in the blank 2d4f3efa1ffef7f_2 $fill in the blank 2d4f3efa1ffef7f_3 Unit costs: Purchase price $fill in the blank 2d4f3efa1ffef7f_4 $fill in the blank…