OBJ. 1 PR 25-4A Differential analysis for further processing The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.20 per pound, and raw sugar can be sold without further processing for $1.40 per pound. Raw sugar is produced in batches of 42,000 pounds by processing 100,000 pounds of sugar cane, which costs $0.35 per pound of cane. Refined sugar will require additional processing costs of $0.50 per pound of raw sugar, and 1.25 pounds of raw sugar will produce 1 pound of refined
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- Question 10.4 Big Machines Corp. has two divisions. Division Y manufactures components that can be sold in the external market place or transferred to Division Z for further processing. The following data relate to Division Y's component product. Variable manufacturing costs/unit $925 Fixed costs/unit at capacity $275 Selling price/unit $1,800 The capacity of the plant is 2,500 units per year. Division Z has offered to purchase 350 units from Division Y at a price of $1,600/unit, which is the market price of the component. The manager of Division Y has refused this offer stating that it would only return a rate of 25.00%, when the divisional target return on sales is 28.00%. The Division Y manager also states that additional fixed costs of $195,000 would be required to produce the 350 units. The corporate required rate of return is 18% of assets and the existing asset base in Division Y is $2,500,000. Required: How many units must Division Y sell in order…Question Content Area Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20.10 per pound and costs $14.15 per pound to produce. Product D would sell for $44.80 per pound and would require an additional cost of $9.70 per pound to produce. The differential cost of producing Product D is a.$11.64 per pound b.$5.82 per pound c.$9.70 per pound d.$7.76 per poundExercise 11-42 (Algo) Sell or Process Further: Multiple Choice (LO 11-9) Oak View Chemicals produces two main products, M-10 and M-20, and one by-product, B-60, from a single input, Chem-X. Products M-10 and M-20 can either be sold at split-off or processed further and sold. A given batch begins with 1,280 gallons of Chem-X with a cost of $115,200. Additional information regarding a batch follows. If Processed Further Product Units Produced Unit Sales Value at Split-off Additional Costs (Per Unit) Sales Value (Per Unit) M-10 28,160 $ 20.00 $ 16.00 $ 20.00 M-20 17,920 $ 24.00 $ 4.00 $ 44.00 B-60 6,400 $ 0.50 NA NA Oak View Chemicals uses the physical quantities method to allocate joint costs and the revenues from by-products are credited to joint costs. Required: Under these assumptions, the following product(s) should be processed further and then sold: Multiple Choice M-20 M-10 Cannot tell from the…
- ex4. Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses). Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 SellIngot(Alternative 1) ProcessFurther intoRolledAluminum(Alternative 2) DifferentialEffecton Income(Alternative 2) Revenues,…Exercise 11-41 (Algo) Net Realizable Value Method: Multiple Choice (LO 11-7) Oak View Chemicals produces two main products, M-10 and M-20, and one by-product, B-60, from a single input, Chem-X. Products M-10 and M-20 can either be sold at split-off or processed further and sold. A given batch begins with 1,100 gallons of Chem-X with a cost of $99,000. Additional information regarding a batch follows. If Processed Further Product Units Produced Unit Sales Value at Split-off Additional Costs (Per Unit) Sales Value (Per Unit) M-10 24,200 $ 5.00 $ 2.00 $ 6.00 M-20 15,400 $ 10.00 $ 4.00 $ 16.00 B-60 5,500 $ 0.50 NA NA Oak View Chemicals uses the net realizable at split-off approach to allocate joint costs and treats the sales value of the by-product B-60 as other income. Required: The joint cost allocated to product M-10 at Oak View Chemicals for a given batch is: Multiple Choice $60,500 $43,560 $42,350…CH. 4 Question 5 A company is considering outsourcing production of one of its products. The company has received a bid from another company to produce 10,000 units per year for $16 each. The following information: Direct Materials $9 Direct Labor $4 Variable Manfuacturing OH $2 Fixed Manufacturing OH $3 Total Cost per unit $18 1) Compute the difference in cost between making and buying the product 2) Should the company buy the product from the other company or continue to make it themselves?
- QS 23-3 (Algo) Identifying relevant costs LO C1 Zycon has produced 8,000 units of raw milk at a $16,000 cost. These units can be sold as is to another manufacturer for $9,600. Instead, Zycon can process the units further and produce yogurt. Processing further will cost an additional $12,800 and will yield revenues of $24,000. Identify whether each of the following is relevant or not relevant to the sell or process further decision. Item a. $16,000 cost already incurred to produce milk b. $9,600 selling price for milk as is c. $12,800 further processing costs d. $24,000 revenue from further processingQS 22-19 (Algo) Determining transfer prices with excess capacity LO C1 The Windshield division of Jaguar Company makes windshields for use in its Assembly division. The Windshield division incurs variable costs of $296 per windshield and has capacity to make 590,000 windshields per year. The market price is $520 per windshield. The Windshield division incurs total fixed costs of $3,750,000 per year. If the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the Windshield and Assembly divisions? Transfer price per windshield will be at least but not more than DravCh 10 Cullumber produces and sells two products—aluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are evaluated based on the product line’s return on investment. The following data is from the most recent year of operations. Aluminum Vinyl Sales $4,800,000 $4,200,000 Variable costs 2,304,000 2,355,000 Direct fixed costs 1,728,000 1,530,000 Average assets 3,200,000 1,500,000
- Chapter 10 C1 Cullumber produces and sells two products—aluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are evaluated based on the product line’s return on investment. The following data is from the most recent year of operations. Aluminum Vinyl Sales $4,800,000 $4,200,000 Variable costs 2,304,000 2,355,000 Direct fixed costs 1,728,000 1,530,000 Average assets 3,200,000 1,500,000Question 2 Cranergy Products is a cranberry cooperative that operates two divisions, a harvesting division and a processing division. Currently, all of harvesting's output is converted into cranberry juice by the processing division, and the juice is sold to large beverage companies that produce cranberry juice blends. The processing division has a yield of 500 gallons of juice per 1,000 pounds of cranberries. Cost and market price data for the two divisions are as follows: o Harvesting Division Variable cost per pound of cranberries Fixed cost per pound of cranberries Selling price per pound of cranberries in outside market $0.14 $0.26 $0.58 Processing Division Variable cost per gallons of juice produced Fixed cost per gallons of juice Selling price per gallons of juice $0.32 $0.50 $2.15 Required: 1. Compute Cranergy's operating income from harvesting 420,000 pounds of cranberries and processing them into juice. 2. Cranergy rewards its division managers with a bonus equal to 3% of…Exercise 3.8 Cost Behavior, Flexible and Committed Resources State University's football team just received a bowl game invitation, and the students and alumni are excited. Holiday Travel Agency, located close to campus, decided to put together a bowl game package. For $50,000, a 737 jet could be chartered to take up to 170 people to and from the bowl city. A block of 85 hotel rooms could be confirmed for $400 each (a three-night commitment); Holiday Travel must pay for all the rooms in advance and cannot cancel any of them. The day of the game, a pregame buffet will be catered at $30 per person, and each person will receive a game favor package (consisting of a sweatshirt, a T-shirt, a commemorative pin with the school and bowl logos, and two pompons in the school's colors). All items in the favor package can be purchased by Holiday Travel on December 21 and will cost the agency $25 per set. Buses will be chartered in the bowl city to transport participants to and from the airport and…