At the end of October, Karen lamented the company's situation: in the middle of production of Metlock-T's most popular long-sleeve T-shirt, the company ran out of its usual collars, purchased from one main supplier. That supplier was also sold out. Metlock-T could get a slightly different premade collar, from a new supplier, at the same cost. So Karen went ahead with the order, hoping it wouldn't delay production or affect the quality of the shirts. As it turned out, the new collars failed Metlock-T's quality control testing. Stuck with unwearable T-shirts, the company was also in a bind with its retail outlets, which wanted more shirts to sell! The costs to produce this most recent batch of shirts is as follows. Direct material Direct labor Manufacturing overhead Total costs Volume in batch $66,000 35,000 15,000 $116,000 20,000 Scrambling, Karen has gone back to her original supplier of collars, which thankfully now has a large quantity it can ship to her. These collars cost $0.50 each, and the company can get enough of them to go back and fix the collars on the recently ruined batch, plus put some into the warehouse for a future batch. In order to fix the botched T-shirts, though, Metlock-T will need to incur an extra $2 per shirt in labor costs to carefully remove the bad collars and re-attach the new ones. These reworked shirts should still be salable to retailers at the regular selling price. How much gross margin per unit will Metlock-T generate if it fixes and sells these reworked shirts? (Round answer to 2 decimal places, e.g. 15.25.) Gross margin $ /unit

Elijah Electronics makes wireless headphone sets. The firm produced 27,000 wireless headphone sets during its first year of operation. At year-end, it had no inventory of finished goods. Elijah sold 25,380 units through regular market channels, but 270 of the units produced were so defective that they had to be sold as scrap. The remaining units were reworked and sold as seconds. For the year, the firm spent $144,000 on prevention costs and $72,000 on quality appraisal. There were no customer returns. An income statement for the year follows.   Sales     Regular channel $5,076,000    Seconds 128,250   Scrap 9,450 $5,213,700  Cost of goods sold     Original production costs $1,725,840    Rework costs 37,800   Quality prevention and appraisal 216,000 $1,979,640  Gross margin   $3,234,060  Selling and administrative expenses (all fixed)   882,000  Profit before income taxes   $2,352,060    Compute the total pre-tax…

Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Presently, the company sells 81,000 units for $65 per unit. The variable production costs are $35, and fixed costs amount to $1,410,000. Production engineers have advised management that they expect unit labor costs to rise by 15 percent and unit materials costs to rise by 10 percent in the coming year. Of the $35 variable costs, 40 percent are from labor and 20 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 5 percent as a result of increased taxes and other miscellaneous fixed charges.   The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 7 percent…

Mallory’s Video Supply has changed its focus tremendously and as a result has dropped the selling price of DVD players from $45 to $38. Some units in the work-in-process inventory have costs of $30 per unit associated with them, but Mallory can only sell these units in their current state for $22 each. Otherwise, it will cost Mallory $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further?   a.   $5 per unit profit   b.   $3 per unit loss   c.   $16 per unit profit   d.   $12 per unit loss

H.S. Sponge is a customer of Anton's Wicked Dive Shop. H.S. Sponge makes up 10% of Anton's total sales volume. H.S. Sponge calls in orders twice a week and has a tedious order verification process, thus taking orders from this customer represents 10% of Anton's total order taking costs. Filling H.S. Sponge's orders is relatively painful due to remote geography and delivery inefficiencies; these costs represent 20% of Anton's total order filling costs. Collections from the H.S. Sponge account are not particularly easy, representing 10% of Anton's total collection costs. Here is the total accounting information for Anton's Wicked Dive Shop. Salaries Supplies Depreciation Take Orders Fill Orders Collections TOTAL: $ 300,000 $100,000 $100,000 $ 500,000 $200,000 $200,000 $100,000 $ 500,000 Anton's Wicked Dive Shop believes that H. S. Sponge is a key profitable customer. Using the traditional accounting technique, what is the cost-to-serve for H. S. Sponge that Anton's accounting department…