Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Question
Chapter 20, Problem 17E
1.
To determine
Ascertain the daily production rate and identify the process of the sets at given rate.
2.
To determine
Calculate the days of buffer inventory in Company D and explain the manner in which the buffer time is determined.
3.
To determine
Explain the meaning of letter A, B and C in the given exhibit and explain the roles in the TOC system.
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Nico Parts, Inc., produces electronic products with short life cycles (of less than two years). De-velopment has to be rapid, and the profitability of the products is tied strongly to the ability to
find designs that will keep production and logistics costs low. Recently, management has alsodecided that post-purchase costs are important in design decisions. Last month, a proposal for anew product was presented to management. The total market was projected at 200,000 units (forthe two-year period). The proposed selling price was $130 per unit. At this price, market sharewas expected to be 25 percent. The manufacturing and logistics costs were estimated to be $120per unit.Upon reviewing the projected figures, Brian Metcalf, president of Nico, called in his chiefdesign engineer, Mark Williams, and his marketing manager, Cathy McCourt. The followingconversation was recorded:
BRIAN: Mark, as you know, we agreed that a profit of $15 per unit is needed for this new prod-uct. Also, as I look…
Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.56 per unit; full cost is $1.98. The component sells on the open market for $4.96.
Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.)
Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.57 per unit; full cost is $1.93. The component sells on the open market for $4.90.
Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.)
lowest price they will accept
Highest price they will accept
Chapter 20 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 20 - What are ordering costs? What are setup costs?...Ch. 20 - Explain why, in the traditional view of inventory,...Ch. 20 - Discuss the traditional reasons for carrying...Ch. 20 - Prob. 4DQCh. 20 - Explain how safety stock is used to deal with...Ch. 20 - Prob. 6DQCh. 20 - What approach does JIT take to minimize total...Ch. 20 - One reason for inventory is to prevent shutdowns....Ch. 20 - Prob. 9DQCh. 20 - Explain how long-term contractual relationships...
Ch. 20 - What is a constraint? An internal constraint? An...Ch. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Explain how lowering inventory produces better...Ch. 20 - Prob. 15DQCh. 20 - Thomas Corporation produces heating units. The...Ch. 20 - Sterling Corporation has an EOQ of 5,000 units....Ch. 20 - Patz Company produces two types of machine parts:...Ch. 20 - Prob. 4CECh. 20 - See Cornerstone Exercise 20.4. Fisher Company has...Ch. 20 - Ottis, Inc., uses 640,000 plastic housing units...Ch. 20 - Ottis, Inc., uses 640,000 plastic housing units...Ch. 20 - Melchar Company uses 78,125 pounds of oats each...Ch. 20 - Prob. 9ECh. 20 - Morrison Manufacturing produces casings for sewing...Ch. 20 - Morrison Manufacturing produces casings for sewing...Ch. 20 - Refer to Exercise 20.10. Assume the economic lot...Ch. 20 - Eyring Manufacturing produces a component used in...Ch. 20 - Hales Company produces a product that requires two...Ch. 20 - Many companies have viewed JIT as a panaceaa...Ch. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Which of the following describes the economic...Ch. 20 - The economic order quantity (EOQ) for Part X15 is...Ch. 20 - A JIT inventory management system maintains which...Ch. 20 - For the theory of constraints, which of the...Ch. 20 - A dedicated pharmaceutical plant uses the theory...Ch. 20 - Prob. 23PCh. 20 - Burnett Company produces two types of gears: Model...Ch. 20 - Taylor Company produces two industrial cleansers...Ch. 20 - Prob. 26PCh. 20 - Calen Company manufactures and sells three...Ch. 20 - Confer Company produces two different metal...Ch. 20 - Pratt Company produces two replacement parts for a...Ch. 20 - Bountiful Manufacturing produces two types of bike...
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