Park corporation is preparing a bid for a special order that would require 760 liters of materials SUN100. The company already has 580 liters of this raw material in stock that originally cost $6.70 per liter. Material SUN100 is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $6.00 per liter. New stocks of the material can be readily purchased for $7.05 per liter. What is the relevant cost of the 760 liters of the raw material when deciding how much to bid on the special order? (CIMA adapted) $5,155 $5,358 $4,966 $4,560

Park corporation is preparing a bid for a special order that would require 760 liters of materials SUN100. The company already has 580 liters of this raw material in stock that originally cost $6.70 per liter. Material SUN100 is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $6.00 per liter. New stocks of the material can be readily purchased for $7.05 per liter. What is the relevant cost of the 760 liters of the raw material when deciding how much to bid on the special order? (CIMA adapted) $5,155 $5,358 $4,966 $4,560

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...

See similar textbooks

Similar questions

Alpha Incorporated regularly uses material FLAV4 and currently has in stock 510 liters of the material for which it paid $2,682 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $5.50 per liter. New stocks of the material can be purchased on the open market for $6.30 per liter, but it must be purchased in lots of 1,250 liters. You have been asked to determine the relevant cost of 1,050 liters of the material to be used in a job for a customer. The relevant cost of the 1,050 liters of material FLAV4 is: (CMA adapted) Multiple Choice $6,615. $5,775. $7,875. $6,207.
Briquette Corporation has in stock 35,800 kilograms of material L that it bought five years ago for $5.55 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material L can be sold as is for scrap for $1.67 per kilogram. An alternative would be to use material L in one of the company's current products, Q08C, which currently requires 2 kilograms of a raw material that is available for $9.15 per kilogram. Material L can be modified at a cost of $0.78 per kilogram so that it can be used as a substitute for this material in the production of product Q08C. However, after modification, 4 kilograms of material L is required for every unit of product Q08C that is produced. Briquette Corporation has now received a request from a company that could use material L in its production process. Assuming that Briquette Corporation could use all of its stock of material L to make product Q08C or the company could sell all of its stock of the material at…
Briquette Corporation has in stock 35,800 kilograms of material L that it bought five years ago for $5.55 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material L can be sold as is for scrap for $1.67 per kilogram. An alternative would be to use material L in one of the company's current products, Q08C, which currently requires 2 kilograms of a raw material that is available for $9.15 per kilogram. Material L can be modified at a cost of $0.78 per kilogram so that it can be used as a substitute for this material in the production of product Q08C. However, after modification, 4 kilograms of material L is required for every unit of product Q08C that is produced. Briquette Corporation has now received a request from a company that could use material L in its production process. Assuming that Briquette Corporation could use all of its stock of material L to make product Q08C or the company could sell all of its stock of the material at…
Scherer Corporation is preparing a bid for a special order that would require 720 liters of material U48N. The company already has 560 liters of this raw material in stock that originally cost $6.30 per liter. Material U48N is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $5.80 per liter. New stocks of the material can be readily purchased for $6.65 per liter. What is the relevant cost of the 720 liters of the raw material when deciding how much to bid on the special order? Select one: a. $4,592 b. $4,788 c. $4,456 d. $4,176
Otool Incorporated is considering using old raw material in a special project. The special project would require all 150 kilograms of the raw material that are in stock and that originally cost the company $2,346 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $8 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $7.20 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $74 for all 150 kilograms. What is the relevant cost of the 150 kilograms of the raw material when deciding whether to proceed with the special project? Multiple Choice $1,165 $1,080 $1,006 $1,185
Markland Manufacturing manufactures desk lamps intends to increase capacity by obtaining new equipment. Two vendors have presented proposals. The purchase cost for proposal A is $30,000, and for proposal B, $80,000. Each proposal will produce lamps of the same quality. Proposal A is expected to produce lamps at $15.00/lamp, while proposal B is significantly more efficient and will produce them at $10.00/lamp. The revenue generated by the sale of each lamp is $20.00/unit. A. What is the point of indifference?B. The manufacturer expects to sell 12,000 lamps and has informed the vendors that it has chosen proposal B. The vendor of proposal A has offered to re-negotiate the purchase price of its proposal in order to win the contract. What purchase price will cause the manufacturerto reconsider its decision?
Blossom Company sells 320 units of its products for $20 each to Wildhorse inc. for cash. Blossom allows Wildhorse to return any unused product within 30 days and receive a full refund. The cost of each product is $11. To determine the transaction price, Blossom decides that the approach that is most predictive of the amount of consideration to which it will be entitled is the probability weighted amount. Using the probability-weighted amount. Blossom estimates that (1) 7 products will be returned, and (2) the returned products are expected to be resold at a profit. Prepare the journal entries for Blossom at the time of the sale to Wildhorse including any expected returns. The company follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter "0" for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cash (To record…
Assume that 4,500 units of the halogen light have been produced and sold during the current year. Analysis of the domestic market indicates that 3,600 additional units of the halogen light are expected to be sold during the remainder of the year at the normal product price determined under the total cost concept. Twilight Lumina Company received an offer from Contech Inc. for 1,400 units of the halogen light at $202.50 each. Contech Inc. will market the units in Southeast Asia under its own brand name, and no selling and administrative expenses associated with the sale will be incurred by Twilight Lumina Company. The additional business is not expected to affect the domestic sales of the halogen light, and the additional units could be produced using existing capacity. a. Prepare a differential analysis report of the proposed sale to Contech Inc. $Revenue from sale of additional units Variable costs of additional units Differential income (loss) from accepting offer
ABC Beverage, LLC purchases its 355-ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is produced by mechanical finishing technologies called brushing or bead blasting. Engineers at Wald are switching to more efficient, faster, and cheaper machines to supply ABC. Use the estimates and MARR = 8% per year to select between the two alternatives. Brush alternative: P = $−400,000; n = 10 years; S = $50,000; nonlabor AOC = $−60,000 in year 1, decreasing by $5000 annually starting in year 2 Bead blasting alternative: P = $−400,000; n is large, assume permanent; no salvage; nonlabor AOC = $−70,000 per year
Need-Based Accounting Corp. has just purchased 10 photocopiers for a total cost of $500,000. The CCA rate for these photocopiers is 20%. The company plans to use these photocopiers for 10 years. By the end of the 10th year, the company expects to move into new imaging system that will no longer require the photocopiers, and the asset pool will then be closed. If the company can sell the photocopiers for $50,000 in 10 years’ time, what amount of terminal loss/CCA recapture can be claimed after the photocopiers have been sold? Assume that half-year rule applies. Please show all calculation steps:
Otool Incorporated is considering using stocks of an old raw material in a special project. The special project would require all 160 kilograms of the raw material that are in stock and that originally cost the company $2,416 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $7 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $6.30 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $67 for all 160 kilograms. What is the relevant cost of the 160 kilograms of the raw material when deciding whether to proceed with the special project?
The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720.000. If these calculators are upgraded at a total cost of $110.000, they can be sold for a total of $170,000 As an alternative, the calculators can be sold in their present condition for $50,000 Assume that Tolar decides to upgrade the calculators. At what selling price per unit would the company be as well off as if it just sold the calculators in their present condition? Multiple Choce $770 per calculator Sho per calculat $230 per calculator