The Colin Division of Sunland Company sells its product for $32 per unit. Variable costs per unit include: manufacturing, $14; and selling and administrative, $3. Fixed costs are: $200000 manufacturing overhead, and $60000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Edward Lewis, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 40000 units or 60000 units next year. What would the net income be under variable costing for each alternative?

Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $54,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,000 more units per year. Currently, the selling price per unit is $25.00 and the cost per unit is $7.80. Direct materials $3.50 Direct labor 1.10 Variable overhead 0.40 Fixed overhead (primarily depreciation of equipment) 2.80 Total $7.80 Using the information provided, calculate the annual financial impact of hiring the extra worker. Profit $_____ ______

Zycon has produced 10,000 units of partially finished Product A. These units cost $15,000 to produce, and they can be sold to another manufacturer for $20,000. Instead, Zycon can process the units further and produce finished Products X, Y, and Z. Processing further will cost an additional $22,000 and will yield total revenues of $35,000. Place an X in the appropriate column to identify whether the item is relevant or irrelevant to the sell or process further decision.

HH Co. uses corrugated cardboard to ship its product to customers. Currently, the company’s returns department incurs annual overhead costs of $126,000 and forecasts 6,000 returns per year. Management believes it has found a better way to package its products. As a result, the company expects to reduce the number of shipments that are returned due to damage by 3%. In addition, the initiative is expected to reduce the department’s annual overhead by $14,000.Compute the returns department’s standard overhead rate per return (a) before the sustainability improvement and (b) after the sustainability improvement.

Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys the Part GX from McMillan Company for $79 instead of making it, Edidas will not use the released facilities in another manufacturing activity. Twenty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost per unit data are as follows: Cost to make the part Direct Materials Direct Labor (S) 30 15 Variable Overhead 20 Fixed Overhead 20 85 Required : 1. Explain which alternative is more attractive to Edidas, make or buy Part GX. 2. Assume there is new information that Edidas is negotiating to purchase cheaper raw materials from supplier (Twenty percent lower price). Is this information relevant or irrelevant? On the basis of financial considerations alone, should Edidas make or buy Part GX? Show your calculations 3. Based on requirement 2, what are relevant qualitative factors that Edidas should consider to decide whether to make or buy Part GX?…

Grey Inc. has been purchasing a component, Z for $85 a unit. The company is currently operating at 75% of full capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Z, determined by absorption costing method, is estimated as follows: Direct materials $30 Direct labor 15 Variable factory overhead 26 Fixed factory overhead 10 Total $81 Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Z. Grey Inc. Proposal to Manufacture Part Z March 12, 20XX Purchase price of Part Z Differential cost to manufacture Z: Direct materials X Direct labor X Variable factory overhead X Cost savings from manufacturing Part Z

Steven oversees the production department for a factory that makes plastic outdoor chairs. department sells all of its production to external parties, and the department has an overall production capacity of 150,000 chairs. Their sales data is as follows: Sales (90,000 chairs) a $460,000, Variable Costs are $206,200, and Fixed Costs are $194,350. The internal Resale would like to purchase 26,700 chairs from the Production Department. They will be selling external retailers for $15.49 per chair. If the Resale Division negotiates a deal with the Pro Department to purchase each chair for its absorption cost plus a 2.4% markup, then what amount of Operating Income the Resale Division would report for their sale of 26,700 cha per unit cost to nearest cents. O $291,831 O $351,105 O $198,235 O $3,612

Race Cars, Inc., produces model cars made from aluminum.  It operates two production departments, Molding and Painting, and has three service departments, Administration, Accounting, and Maintenance.  The accumulated costs in the three service departments were $250,000, $400,000 and $200,000, respectively.  Management is concerned that the costs of its service departments are getting too high. In particular, managers would like to keep the costs of service departments under $3.50 per unit on average.  You have been asked to allocate service department costs to the two production departments and compute the unit costs. The company decided that Administration costs should be allocated on the basis of square footage used by each production and service department. Accounting costs are allocated on the basis of number of employees. Maintenance cost are allocated on the basis of the dollar value of the equipment in each department. The use of each base by all departments during the current…

(Note: This type of decision is similar to dropping a product line.) Nicholas Company manufactures a fast-bonding glue, normally producing and selling 64,000 litres of the glue each month. This glue, which is known as MJ-7, is used in the wood industry to manufacture plywood. The selling price of MJ-7 is $50 per litre, variable costs are $30 per litre, fixed manufacturing overhead costs in the plant total $368,000 per month, and the fixed selling costs total $492,800 per month. Strikes in the mills that purchase the bulk of the MJ-7 glue have caused Nicholas Company's sales to temporarily drop to only 16,000 litres per month. Nicholas Company's management estimates that the strikes will last for two months, after which sales of MJ-7 should return to normal. Due to the current low level of sales, Nicholas Company's management is thinking about closing down the plant during the strike. If Nicholas Company does close down the plant, fixed manufacturing overhead costs can be reduced by…

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…