Quality Clothing, Inc., produces skorts and jumper uniforms for school children. In the process of cutting out the cloth pleces for each product, a certain amount of scrap cloth is produced. Quality has been selling this cloth scrap to Jorge's Scrap Warehouse for $3.30 pound. Last year, the company sold 42,000 lb. of scrap, which would be enough to make 10,500 teddy bears that the management of Quality is now Interested in producing. Their processes would need some reprogramming, particularly in the cutting and stitching processes, but it would require no additional worker training. However, new packaging would be needed. The total variable cost to produce the teddy bears $3.80. Fixed costs would increase by $93,000 per year for the lease of the packaging equipment and Quality estimates it could produce and sell 10,500 teddy bears per year. Finished teddy bears could be sold for $18.00 each. Calculate the effect on operating Income. Round your answers to the nearest dollar. Sell at Split-Off $ Process Further s Should Quality continue to sell the scrap cloth should Quality process the scrap Into teddy bears to sell? Sell the Scrap Feedback ✓ Check My Work What costs would be associated with deciding to sell at the split-off? What costs would be involved with processing further? This involves units sold and other per units amounts. How would these Items (for each scenario) affect operating Income?

As a boba manufacturer company, Ngeboba supplies boba to Gula Hula and BobaTime. Ngeboba supplies 100 kgs to Gula Hula per month and also 500 kgs to Boba Time per month. Ngeboba as one of the founders of Gula Hula and BobaTime, felt responsible for the supply of boba for both brands. Ngeboba itself has a product cost of IDR 10,000 per kilo. Ngeboba sells to other customers than Gula Hula and BobaTime for IDR 20,000 per kilogram. GulaHula gets prices from other suppliers at IDR 17,000 per kilogram, while BobaTime gets 2,000 cheaper prices per kilogram than the price obtained by Gula Hula because it buys more.In general, Ngeboba's production capacity is 2 (two) tons per month. During the 3rd quarter,Ngeboba felt that his sales had risen drastically, so Ngeboba was faced with the following conditions: Demand from customers is full up to 2 (two) tons in July because it is the dry season. With Ngeboba, they felt that they couldn't help but they need to supply Gula Hula and BobaTime. In…

Organicplus processes organic milk into plain yogurt. Organicplus sells plain yogurt to​ hospitals, nursing​ homes, and restaurants in​ bulk, one-gallon containers. Each​ batch, processed at a cost of $870​, yields 645 gallons of plain yogurt. The company sells the​ one-gallon tubs for $6.00 each and spends $0.12 for each plastic tub. Organicplus has recently begun to reconsider its strategy. Management wonders if it would be more profitable to sell​ individual-sized portions of fruited organic yogurt at local food stores. Organicplus could further process each batch of plain yogurt into 13,760 individual portions​ (3/4 cup​ each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Organicplus would sell each individual portion for $0.52. Packaging would cost $0.06 per​ portion, and fruit would cost $0.10 per portion. Fixed costs would not change. Should Organicplus continue to sell only the​ gallon-sized plain yogurt​ (sell as​ is) or convert the…

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C. W. McCall sells a goldplated souvenir mug; McCall expects to sell 2,100 units for $50 each to earn a $30 contribution margin per unit. Janice McCall, president, expects the year’s total market to be 35,000 units. For the year just completed, the local college won the national hockey championship, and as a result, the total actual market was 140,000 units. C. W. McCall sold 5,600 units and calculates sales variances using contribution margin.   What is the firm’s sales volume variance?

The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school.   These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Hooper $20.00 each with a minimum order of 151 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 151.   Since Hooper’s plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $40.00 each. Hooper would pay the students a commission of $8.00 for each shirt sold.   Required: 1. What level of unit sales and dollar sales is needed to attain a target profit of…

Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding. Coram has manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local outfitter that manufactures and sells backpacks, tent cases, and so on, contacted Coram and proposed that they produce the headphone travel cases. Based on management experience, Coram's cost per travel case is as follows (based on annual production of 40,000 units). Direct materials Direct labor Variable overhead Fixed overhead Total HTG has offered to sell the case to Coram for $39 each. The total order would amount to 40,000 travel cases per year. Coram's management decides that they will make the switch to HTG cases if Coram can save at least $12,000 per year. Accepting the offer would eliminate annual fixed overhead of $76,000. Required: a. Prepare a schedule that shows the total differential costs. b. Should Coram continue to make the travel cases or buy them from HTG? $ 10.00 21.20…

Guthrie Generators manufactures a solenoid that it uses in several of its products. Management is considering whether to continue manufacturing the solenoids or to buy them from an outside source. The following information is available: 1. The company needs 20,000 solenoids per year. The solenoids can be purchased from an outside supplier at a cost of $15 per unit. 2. The unit cost of manufacturing the solenoids is $20, computed as follows: Direct materials Direct labor Factory overhead: Variable Fixed Total manufacturing costs Cost per unit ($400,000 ÷ 20,000 units) 3. If the company decides not to manufacture the solenoids, it will eliminate all of the raw materials and direct labor costs but only 75 percent of the variable factory overhead costs. 4. If the solenolds are purchased from the outside source, machinery used in the production of solenoids will be sold at its book value. Accordingly, no gain or loss will be recognized. The sale of this machinery would also eliminate $5,000…

The owner of Warwick Printing is planning direct labor needs for the upcoming year.  The owner has provided you with the following information for next year's plans:   Each color on the banner must be printed one at a time. Thus, for example, a four-color banner will need to be run through the printing operation four separate times.  The total production volume last year was 800, as follows:   The four-color banner is a new product offering for the upcoming year.  The owner believes that the expected 1,000-unit increase in volume fromlast year means that direct labor expenses should increase bu 125% (1,000/800). What do you think?

The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. These sweatshirts would have to be ordered from the manufacturer six weeks in advance and could not be returned because of the unique printing required. The sweatshirts would cost Hooper $23.00 each with a minimum order of 168 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 168. Because Hooper's plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $46.00 each. Hooper would pay the students a commission of $6.00 for each shirt sold. Required: 1. What level of unit sales and dollar sales is needed to attain a target profit of $11,424? 2.…