To automate one of its production processes, Milwaukee Corporation bought three flexible manufacturing cells at a price of $400,000 each. When they were delivered, Milwaukee paid freight charges of $30,000 and handling fees of $15,000. Site preparation for these cells cost $50,000. Six employees, each earning $15 an hour, worked five 40-hour weeks to set up and test the manufacturing cells. Special wiring and other materials applicable to the new manufacturing cells cost $2,000. Determine the cost basis (the amount to be capitalized) for these cells.

In its production process, Purple Tree Inc uses a specialized part in the manufacturing of their fancy widget.  The costs to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Purple Tree has received a quote of $60 from a potential supplier for this part. If Purple Tree buys the part, 75 percent of the applied fixed overhead would continue. They need 12,000 units of the specialized part.  Purple Tree Company would be better off by Group of answer choices $60,000 to buy the part. $348,000 to buy the part. $30,000 to manufacture the part. $216,000 to manufacture the part.

Session Company uses 5,000 units of Part Y each year as a component in the assembly of one of its products. The company is presently producing Part Y internally at a total cost of $72,000 as follows: Direct materials $18,000 Direct labor $20,000 Variable MOH $10,000 Fixed MOH $24,000 Total costs $72,000 An outside supplier has offered to provide Part Y at a price of $12 per unit. If Session Company stops producing the part internally, one-third of the fixed manufacturing overhead would be eliminated. Accepting the outside supplier's offer leads to an annual advantage/disadvantage of:   Advantage of $4,000 Disadvantage of $4,000 Disadvantage of $12,000 Advantage of $12,000

Bird’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable overhead. The company’s annual fixed overhead cost is $1,800,000; it uses expected capacity of 30,000 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are $432,000. The following additional information is available:   Year 1 Year2 Selling price per unit $500 $500 Number of units sold 24,000 28,800 Number of units produced 30,000 26,400 Beginning inventory (units) 18,000 24,000 Ending inventory (units) 24,000 ? a. Prepare pre-tax income statements under absorption and variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold.

Magnificent Modems has excess production capacity and is considering the possibility of making and selling security tokens. The following estimates are based on a production and sales volume of 1,000 security tokens. Unit-level manufacturing costs are expected to be $20. Sales commissions will be established at $1 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($60,000), rent on the manufacturing facility ($50,000), depreciation on the administrative equipment ($12,000), and other fixed administrative expenses ($71,950), will not be affected by the production of the security tokens. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (security tokens) on the basis of the number of units of product made (i.e., 5,000 modems and 1,000 security tokens). Required a. Determine the per-unit cost of making and selling 1,000 security tokens. Note: Do not round intermediate…

The Enhanced Products Division of Forrest Industries makes ceramic pots that are used to hold large decorative plants. During 2013, the division produced 10,000 pots and incurred the following costs: unit-level material costs (10,000@ $15)      $15,000 unit-level labor costs  (10,000@ $20)          $200,000 Unit-level overhead costs  (10,000 @16)     $160,000 Depreciation expenses on equipment*         $30,000 Other manufacturing overhead **                    $36,000  *The equipment was purchased for $150,000 and has a current book value of $120,000, remaining useful life of four years, and a zero salvage value. If the company does not use the equipment, it can be leased for $8,000 per year.**Includes supervisors' salaries and rent for manufacturing plant.The division is considering replacing the equipment used to manufacture its ceramic pots. Replacement equipment can be purchased at a price of $200,000. The new equipment, which is expected to last 4 years and have a salvage value of…

Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $40 each. The company is considering making the switches internally at the following projected annual production costs:       Unit-level material cost $ 8   Unit-level labor cost $ 7   Unit-level overhead $ 6   Batch-level set-up cost (4,000 units per batch) $ 30,000   Product-level supervisory salaries $ 40,000   Allocated facility-level costs $ 25,000       The company expects an annual need for 4,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $2,000 a month. If the company decides to make the parts, total costs will be: Multiple Choice a.$18,000 more than if the switches are purchased. b.$43,000 more than if the switches are purchased. c.$22,000 less than if the switches are purchased. d.$25,000 less than if the switches are purchased.

Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: Variable costs per unit:     Fixed costs:   Direct materials $120   Factory overhead $250,000 Direct labor 30   Selling and administrative expenses 150,000 Factory overhead 50       Selling and administrative expenses 35       Total variable cost per unit $235         Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% return on invested assets.   6.  Assume that as of August 1, 3,000 units of flat panel displays have been produced and sold during the current year. Analysis of the domestic market indicates that 2,000 additional units are…

Linwood Company recently began production of a new navigation device, which required a capital investment of $660,000. Linwood is currently considering establishing a selling price for this new device that will ensure a 25% return on the capital investment. The engineering and the sales department compiled the following estimates for producing and selling 77,000 devices:   Per Unit Total (77,000 units) Direct Materials $12   Direct Labor $26   Variable Manufacturing Overhead $14   Selling and Administrative Expenses $17   Fixed Manufacturing Overhead   $223,000 General and Administrative Expenses   $73,000 Required:Do not enter dollar signs or commas in the input boxes.Round all answers to 2 decimal places.a) Using the cost plus pricing method, calculate the markup percentage.Full Cost: $Answer Markup Percentage: Answer %b) The company has a cost plus pricing policy that uses the absorption (full) cost as the cost base and the markup percentage calculated in part a).…

Waterway has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 19,900 RecRobos is as follows:   Cost Direct materials ($45 per robot) $895,500 Direct labor ($31 per robot) 616,900 Variable overhead ($8 per robot) 159,200 Allocated fixed overhead ($23 per robot) 457,700 Total $2,129,300 Waterway is approached by Cinrich Inc., which offers to make RecRobo for $83 per unit or $1,651,700.  Using incremental analysis, determine whether Waterway should accept this offer under this following independent assumption: (see attachement). In attachement: see dropdown options. Please don't forget to answer: should the offer be accepted or not.