Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 11E
1.
To determine
Calculate the change in income of Company E if company is accepted the new order.
2.
To determine
Explain whether the given order required any change in capacity for setup, packing or machining.
3.
To determine
Explain the manner in which the given situation would affect the special order.
4.
To determine
Explain the reason why the company decides to accept the special order even if it incurs loss.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Becky Shelton, a marketing coordinator for Douglass Enterprises, is in charge of ordering the T-shirts to be sold for the
company's annual fund-raising project. The T-shirts are printed with a special Douglass Enterprises logo. In some years, the
supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-
shirts are normally donated to some charitable organization. T-shirts cost the company $7 each and are normally sold for $14
each. Ms. Shelton has decided to order 700 shirts.
Required
a. If the company receives actual sales orders for 625 shirts, what amount of profit will the company earn? What is the cost of
waste due to excess inventory?
b. If the company receives actual sales orders for 740 shirts, what amount of profit will the company earn? What amount of
opportunity cost will the company incur?
a. Profit
a. Waste due to excess inventory
b. Profit
b. Opportunity cost
A nonprofit decides to provide free food for the homeless in Thanksgiving holidays. The manager wants to write a proposal to raise money from their donors. Assume that the project requires a fixed cost of $5,000 for staff and equipment. The variable cost such as utensils and food is $5 per person served. Based on the manager's experience, the manager estimates there will be 200 homeless people to serve. What is the price per person that the manager should put into his/her proposal?
a.$5
b.$30
c.$25
d.$5,000
Becky Shelton, a marketing coordinator for Douglass Enterprises, is in charge of ordering the T-shirts to be sold for the company's
annual fund-raising project. The T-shirts are printed with a special Douglass Enterprises logo. In some years, the supply of T-shirts has
been Insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated
to some charitable organization. T-shirts cost the company $7 each and are normally sold for $14 each. Ms. Shelton has decided to
order 870 shirts.
Required
a. If the company receives actual sales orders for 795 shirts, what amount of profit will the company earn? What is the cost of waste
due to excess inventory?
b. If the company receives actual sales orders for 910 shirts, what amount of profit will the company earn? What amount of opportunity
cost will the company Incur?
a. Profit
a. Waste due to excess inventory
b. Profit
b. Opportunity cost
Chapter 17 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 17 - What is tactical decision making?Ch. 17 - Tactical decisions are often small-scale decisions...Ch. 17 - What is tactical cost analysis? What steps in the...Ch. 17 - What is a relevant cost? Explain why depreciation...Ch. 17 - Give an example of a future cost that is not...Ch. 17 - Prob. 7DQCh. 17 - Can direct materials ever be irrelevant in a...Ch. 17 - What role do past costs play in tactical cost...Ch. 17 - When will flexible resources be relevant to a...Ch. 17 - Prob. 11DQ
Ch. 17 - Prob. 12DQCh. 17 - Prob. 13DQCh. 17 - Prob. 14DQCh. 17 - Why would a firm ever offer a price on a product...Ch. 17 - Each year, Basu Company produces 18,000 units of a...Ch. 17 - Reshier Company makes three types of rug...Ch. 17 - Sequoia Paper Products, Inc., manufactures boxed...Ch. 17 - Betram Chemicals Company processes a number of...Ch. 17 - Prob. 5ECh. 17 - Elliott, Inc., has four salaried clerks to process...Ch. 17 - Prob. 7ECh. 17 - Feinan Sports, Inc., manufactures sporting...Ch. 17 - Wehner Company is currently manufacturing Part...Ch. 17 - Brees, Inc., a manufacturer of golf carts, has...Ch. 17 - Prob. 11ECh. 17 - Nutterco, Inc., produces two types of nut butter:...Ch. 17 - Carleigh, Inc., is a pork processor. Its plants,...Ch. 17 - Global Reach, Inc., is considering opening a new...Ch. 17 - Tony and Tina Roselli own and run TNTs Pizza...Ch. 17 - Jason Rogers works full-time for UPS and runs a...Ch. 17 - Prob. 17ECh. 17 - A company is considering a special order for 1,000...Ch. 17 - Walloon Company produced 150 defective units last...Ch. 17 - Pasha Company produced 50 defective units last...Ch. 17 - Future costs that differ across alternatives are:...Ch. 17 - Thaler Company bought 26,000 of raw materials a...Ch. 17 - Norton Products, Inc., manufactures...Ch. 17 - Prob. 24PCh. 17 - Fiorello Company manufactures two types of...Ch. 17 - St. Johns Medical Center (SJMC) has five medical...Ch. 17 - Brandy Dees recently bought Nievo Enterprises, a...Ch. 17 - Apollonia Dental Services is part of an HMO that...Ch. 17 - Pharmaco Corporation buys three chemicals that are...Ch. 17 - KarlAuto Corporation manufactures automobiles,...Ch. 17 - Morrill Company produces two different types of...Ch. 17 - Paladin Company manufactures plain-paper fax...
Knowledge Booster
Similar questions
- Home Builder Supply, a retailer in the home improvement industry, currently operates seven retail outlets in Georgia and South Carolina. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $10,000 on market research to determine the extent of customer demand for the new store. Now Home Builder Supply must decide whether to build and open the new store. Which of the following should be included as part of the incremental earnings for the proposed new retail store?arrow_forwardHome Builder Supply, a retailer in the home improvement industry, currently operates seven retail outlets in Georgia and South Carolina. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $15,000 on market research to determine the extent of customer demand for the new store. Now Home Builder Supply must decide whether to build and open the new store. a. Should the original purchase price of the land where the store will be located be included in the incremental earnings for the proposed new retail store? (Select from the drop-down menu.) b. Should the cost of demolishing the abandoned warehouse and clearing the lot be included in the incremental earnings for the proposed new retail store? (Select from the drop-down menu.) c. Should the loss of sales in the existing retail…arrow_forwardHome Builder Supply, a retailer in the home improvement industry, currently operates seven retail outlets in Georgia and South Carolina. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $15,000 on market research to determine the extent of customer demand for the new store. Now Home Builder Supply must decide whether to build and open the new store. Which of the following should be included as part of the incremental earnings for the proposed new retail store? a. The original purchase price of the land where the store will be located. b. The cost of demolishing the abandoned warehouse and clearing the lot. c. The loss of sales in the existing retail outlet, if customers who previously drove across town to shop at the existing outlet become customers of the new store instead.…arrow_forward
- a retailer in the home improvement industry, currently operates seven retail outlets in Manama and Dubai. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $10,000 on market research to determine the extent of customer demand for the new store. Now Noor Supply must decide whether to build and open the new store. Which of the following should be included as part of the incremental earnings (or cash flow) for the proposed new retail store? The cost of the land where the store will be located. The cost of demolishing the abandoned warehouse and clearing the lot. The loss of sales in the existing retail outlet, if customers who previously drove across town to shop at the existing outlet become customers of the new store instead. The $10,000 in market research spent to…arrow_forwardHome Builder Supply, a retailer in the home improvement industry, currently operates seven retail outlets in the Maritimes. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $15,000 on market research to determine the extent of customer demand for the new store. Now Home Builder Supply must decide whether to build and open the new store. Which of the following should be included as part of the incremental earnings for the proposed new store? a. The original purchase price of the land where the store will be located. b. The cost of demolishing the abandoned warehouse and clearing the lot. c. The loss of f sales in the existing retail outlet, if customers who previously drove from Dartmouth to Halifax to shop at the existing outlet become customers of the new store instead. d.…arrow_forwardEach fall and spring, the youth group puts together a yard clean-up day to help community members with leaf raking, tree mulching. and miscellaneous other outside chores. The group works hard to fundraise so that it can cover the transportation cost to and from each location; transportation costs of gas and mileage for the group's large-capacity van average about $8 per trip. This year, the group anticipates serving 55 locations on its fall clean-up day. Besides transportation costs, the only other costs are for depreciation on yard equipment like leaf blowers, which amounts to $390 for this fall season. (a) In order to just cover the costs to service these locations, how much does the group need to fundraise? The youth group will need to raise $arrow_forward
- Becky Shelton, a teacher at Kemp Middle School, is in charge of ordering the T-shirts to be sold for the school's annual fund-raising project. The T-shirts are printed with a special Kemp School logo. In some years, the supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated to some charitable organization. T-shirts cost the school $7 each and are normally sold for $14 each. Ms. Shelton has decided to order 900 shirts. Required a. If the school receives actual sales orders for 825 shirts, whalomount of profit will the school earn? What is the cost of waste due to excess inventory? b. If the school receives actual sales orders for 935 shirts, what amount of profit will the school earn? What amount of opportunity cost will the school incur? Profit a. Waste due to excess inventory Profit b. Opportunity costarrow_forwardBecky Shelton, a teacher at Kemp Middle School, is in charge of ordering the T-shirts to be sold for the school's annual fund-raising project. The T-shirts are printed with a special Kemp School logo. In some years, the supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated to some charitable organization. T-shirts cost the school $7 each and are normally sold for $15 each. Ms. Shelton has decided to order 800 shirts. Required a. If the school receives actual sales orders for 725 shirts, what amount of profit will the school earn? What is the cost of waste due to excess inventory? b. If the school receives actual sales orders for 820 shirts, what amount of profit will the school earn? What amount of opportunity cost will the school incur? a. b. Profit Waste due to excess inventory Profit Opportunity costarrow_forwardAdam Gase Diner is a charity supported by donations that provides free meals to the homeless Jets Fans and Crying Jets fan Accounting Professors. The diner's budget for May was based on 2,700 meals, but the diner actually served 2,900 meals. Things never go quite as planned at this diner but Adam is promising to work hard. The diner's director, Joe "trade away all the best food" Douglas has provided the following cost data to use in the budget: groceries, $4.25 per meal; kitchen operations, $4,700 per month plus $1.73 per meal; administrative expenses, $3,700 per month plus $0.38 per meal; and fundraising expenses, $1,700 per month. The director has also provided the diner's statement of actual expenses for the month: Adamyan Urban Diner Statement of Expenses For the Month Ended May 31 Actual meals Groceries Kitchen operations Administrative expenses Fundraising expenses 2,900 $12,275 9,500 4,622 1,700 Total expense $28,097 Required: Prepare a report showing the activity variances for…arrow_forward
- A volunteer has been asked to drop off some supplies at a facility housing victims of a hurricane evacuation. The volunteer would like to bring at least 240 bottles of water, 117 first aid kits, and 83 security blankets on his visit. The relief organization has a standing agreement with two companies that provide victim packages. Company A can provide packages of 21 water bottles, 9 first aid kits, and 7 security blankets at a cost of $2. Company B can provide packages of 8 water bottles, 5 first aid kits, and 3 security blankets at a cost of $1.50. How many of each package should the volunteer pick up to minimize the cost? What amount does the relief organization pay? Answer Enter the value in the first box and the ordered pair in the second box. Minimum Cost of S Minimum Cost at Tables Keypad Keyboard Shortcutsarrow_forwardWhitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's suppliers suggested that Whitcomb could increase its profitability by 50 percent if it introduced a second line of products, packaged dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made. When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you." Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer. Required: Complete the below table by filling in the blank cells. Note: Enter all amounts as positive values.…arrow_forwardWhitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's suppliers suggested that Whitcomb could increase its profitability by 50 percent if it introduced a second line of products, packaged dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made. When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you." Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer. Required: Complete the below table by filling in the blank cells. Note: Enter all amounts as positive values.…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education