Recommended: graph each alternative with units on the x-axis and $ on the y-axis. Also, include revenue on the chart. Identify the break-even points and points of indifference. For help on this, see the video posted in Moodle. When comparing Alternative B to Alternative C, C is the most attractive option above units. DO NOT INCLUDE A COMMA. Round your answer to the nearest whole number and do not include units or a comma. For example, submit 12450 and NOT 12,450.
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- The management of Hartman Company is trying to determine the amount of each of two products to produce over the coming planning period. The following information concerns labor availability, labor utilization, and product profitability: a. Develop a linear programming model of the Hartman Company problem. Solve the model to determine the optimal production quantities of products 1 and 2. b. In computing the profit contribution per unit, management does not deduct labor costs because they are considered fixed for the upcoming planning period. However, suppose that overtime can be scheduled in some of the departments. Which departments would you recommend scheduling for overtime? How much would you be willing to pay per hour of overtime in each department? c. Suppose that 10, 6, and 8 hours of overtime may be scheduled in departments A, B, and C, respectively. The cost per hour of overtime is 18 in department A, 22.50 in department B, and 12 in department C. Formulate a linear programming model that can be used to determine the optimal production quantities if overtime is made available. What are the optimal production quantities, and what is the revised total contribution to profit? How much overtime do you recommend using in each department? What is the increase in the total contribution to profit if overtime is used?You have been asked to decide about one of two mutually exclusive alternatives (A & B). The following table gives the initial costs, annual savings in labor costs, and the expected life of two pieces of equipment. Plot PW vs. i for each equipment on the same graph and identify the AAIRR from the graph (i for the intersection). Then, highlight the corresponding value of i in yellow in your spreadsheet. High-cost Equipment (A) Low-cost Equipment (B) Initial Cost $137,910 $100,000 Savings in Labor Costs $42,000 / year $32,000 / year Life 5 years 5 yearsCairo Consulting wants to determine whether reselling process consulting services provided by third parties would reduce the costs of this type of consulting. Switch to the Process Providers worksheet, and then run Solver to solve this problem as follows: a. Set the objective as minimizing the value in cell E10 (Total Costs). b. Use the range B4:D4 as the changing variable cells. Adjust the hours provided by each company using the following constraints: E4=5500, the total hours of process consulting signed E10 is less than or equal to 1350000, the maximum third-party fees B4:D4 is less than or equal to 5000, the maximum hours provided by a single third-party provider B4:D4 should be an Integer Run Solver, keep the solution, and then return to the Solver Parameters dialog box. Save the model to the range A14:A21, and then close the Solver Parameters dialog box. C. d. e. f. 9.
- One of your acquaintances notes, "The whole subject of differential costing is easy; variable costs are the only costs that are relevant." How would you respond? The post will need to be a minimum of 100 words. A proper response will include some of the concepts from the chapter, though you will need to reiterate the information in your own words and analysis of the concepts. Remember to write your answer as if you are talking to a non-accountant!You have been asked by management to classify the costs associated with the start-up of this new product line. Using the cost information provided below, classify each cost under the appropriate heading according to the chart provided below. Note that some costs may be classified under more than one heading. For example, a cost may be a fixed cost and a period cost. Name of cost Variable Cost Fixed Cost Direct Materials Direct Labor Factory Overhead Period Cost Prime Cost Conversion Cost Carlson “New Product” Cost Information Cost Amount Cost Type Depreciation on Building (annual) $ 10,000 Direct Labor Cost (per unit) $ 75 Direct Materials Cost (per unit) $ 60 Factory Utilities (per unit) $ 8 Indirect Materials (per unit) $ 4 Interest on Investments (annual) $3,000 Machinery Rental (monthly) $ 6,000 Marketing (annual) $ 35,000 Rent from Tenant (annual) $40,000…If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,900 mailboxes? 5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,900 mailboxes? 6. What is the dollar difference between your answers to questions 4 and 5? Which approach to forecasting costs is appropriate? Why?
- Select all that are true with respect to comparing machines with unequal lives - i.e., choosing the best machine for the project. Group of answer choices If you simply estimate NPV without accounting for the different lives, NPV may lead to an incorrect decision You cannot use NPV to make this decision If you estimate NPV CORRECTLY, it will lead you to the correct decision One way to handle this type of decision, is to use what is called "equivalent annual cost" (EAC), which is essentially the all-in annual economic cost of the machine Estimate equivalent annual cost (EAC) by taking the NPV of the machine and dividing by its useful lifeBurger Office Equipment produces two types of desks, standard and deluxe. Deluxe desks have oak tops and more expensive hardware and require additional time for finishing and polishing. After reviewing the hardware and labor required along with the profit for each model, Burger Office Equipment found the following linear optimization model for profit, where S is the number of standard desks produced and D is the number of deluxe desks produced. Implement the linear optimization model on a spreadsheet and use Solver to find an optimal solution. Interpret the optimal solution, identify the binding constraints, and verify the values of the slack variables. Maximize Profit=240 S+350 D 65 S+45 D≤6000 20 D≤ 800 (Availability of pine) 9 S+18 D≤500 S≥0 and D≥0 (Availability of oak) (Availability of labor) Implement the linear optimization model and find an optimal solution. Interpret the optimal solution. The optimal solution is to produce standard desks and deluxe desks. This solution gives…1. Compute the annual net cost savings promised by the automated welding machine. 2a. Using the data from (1) above and other data from the problem, compute the automated welding machine’s net present value. 2b. Would you recommend purchasing the automated welding machine? 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment?
- Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?Salem Electronics currently produces two products: a programmable calculator and a tape recorder. A recent marketing study indicated that consumers would react favorably to a radio with the Salem brand name. Owner Kenneth Booth was interested in the possibility. Before any commitment was made, however, Kenneth wanted to know what the incremental fixed costs would be and how many radios must be sold to cover these costs. In response, Betty Johnson, the marketing manager, gathered data for the current products to help in projecting overhead costs for the new product. The overhead costs based on 30,000 direct labor hours follow. (The high-low method using direct labor hours as the independent variable was used to determine the fixed and variable costs.) All depreciation. The following activity data were also gathered: Betty was told that a plantwide overhead rate was used to assign overhead costs based on direct labor hours. She was also informed by engineering that if 20,000 radios were produced and sold (her projection based on her marketing study), they would have the same activity data as the recorders (use the same direct labor hours, machine hours, setups, and so on). Engineering also provided the following additional estimates for the proposed product line: Upon receiving these estimates, Betty did some quick calculations and became quite excited. With a selling price of 26 and just 18,000 of additional fixed costs, only 4,500 units had to be sold to break even. Since Betty was confident that 20,000 units could be sold, she was prepared to strongly recommend the new product line. Required: 1. Reproduce Bettys break-even calculation using conventional cost assignments. How much additional profit would be expected under this scenario, assuming that 20,000 radios are sold? 2. Use an activity-based costing approach, and calculate the break-even point and the incremental profit that would be earned on sales of 20,000 units. 3. Explain why the CVP analysis done in Requirement 2 is more accurate than the analysis done in Requirement 1. What recommendation would you make?Discuss how, as warehouse manager for Vinnies Vinyls, you view the different rate of allocated costs the warehouse is being charged compared to the West store. Describe the implications of this. What steps could you take to solve this discrepancy? What alternatives would you consider, assuming management is willing to consider making changes in the rate?