Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 25, Problem 19E
Refer to Exercise E25-18. Cool Systems needs 79,000 optical switches. By outsourcing them, Cool Systems can use its idle facilities to manufacture another product that will contribute $225,000 to operating income.
Requirements
- 1. Identify the expected net costs that Cool Systems will incur to acquire 79,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product.
- 2. Which plan makes the best use of Cool System’s facilities? Support your answer.
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InteliSystems needs 79,000 optical switches next year . By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $140,000 to operating income, but none of the fixed costs will be avoidable. Should InteliSystems make or buy the switches? Show your analysis based on the information in the table below for making 70,000 switches.
Eyescape
Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell
Eyescape
Systems the switch for
$14.50
per unit. None of
Eyescape's
fixed costs are avoidable.
1(Click
the icon to view the outsourcing decision.)
Eyescape
Systems needs
78,000
optical switches. By outsourcing them,
Eyescape
Systems can use its idle facilities to manufacture another product that will contribute
$224,000
to operating income.
Read the
requirements2.
Requirement 1. Identify the expected net costs that
Eyescape
Systems will incur to acquire
78,000
switches under three alternative plans.
Outsource switches
Facilities
Make new
Switch costs
Make
Idle
product
Variable costs:
Direct materials
Direct labor
Variable manufacturing overhead
Purchase cost
Expected profit contribution from the other product…
Question: The management of Health Supplement Inc. wants to reduce its labor cost by installing a new machine. Two types of machines are available in the market – machine X and machine Y. Machine X would cost $18,000 where as machine Y would cost $15,000. Both the machines can reduce annual labor cost by $3,000.Required:Which is the best machine to purchase according to payback method?
Chapter 25 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Ch. 25 - Doherty Company is considering replacing the...Ch. 25 - Prob. 2TICh. 25 - Prob. 3TICh. 25 - Prob. 4TICh. 25 - Prob. 5TICh. 25 - Prob. 6TICh. 25 - Thomas Company makes a product that regularly...Ch. 25 - Prob. 8TICh. 25 - McCollum Company manufactures two products. Both...Ch. 25 - Prob. 10TI
Ch. 25 - Grimm Company makes decorative wedding cakes. The...Ch. 25 - Prob. 12TICh. 25 - Prob. 1QCCh. 25 - Prob. 2QCCh. 25 - Which of the following costs are irrelevant to...Ch. 25 - When making decisions, managers should consider a....Ch. 25 - When pricing a product or service, managers must...Ch. 25 - When companies are price-setters, their products...Ch. 25 - Prob. 7QCCh. 25 - In deciding which product lines to emphasize when...Ch. 25 - When making outsourcing decisions, which of the...Ch. 25 - When deciding whether to sell as is or process a...Ch. 25 - List the four steps in short-term decision making....Ch. 25 - Prob. 2RQCh. 25 - What makes information irrelevant to decision...Ch. 25 - What are sunk costs? Give an example.Ch. 25 - Prob. 5RQCh. 25 - Prob. 6RQCh. 25 - What are the two keys in short-term decision...Ch. 25 - What questions should managers answer when setting...Ch. 25 - Prob. 9RQCh. 25 - What is target pricing? Who uses it?Ch. 25 - What does the target full product cost include?Ch. 25 - What is cost-plus pricing? Who uses it?Ch. 25 - What questions should managers answer when...Ch. 25 - When completing a differential analysis, when are...Ch. 25 - Prob. 15RQCh. 25 - What questions should managers answer when...Ch. 25 - Prob. 17RQCh. 25 - What is a constraint?Ch. 25 - Prob. 19RQCh. 25 - What is the decision rule concerning products to...Ch. 25 - Prob. 21RQCh. 25 - Prob. 22RQCh. 25 - What questions should managers answer when...Ch. 25 - What questions should managers answer when...Ch. 25 - Prob. 25RQCh. 25 - Prob. 26RQCh. 25 - You are trying to decide whether to trade in your...Ch. 25 - Skiable Acres operates a Rocky Mountain ski...Ch. 25 - Refer to details about Skiable Acres from Short...Ch. 25 - Prob. 4SECh. 25 - StoreAll produces plastic storage bins for...Ch. 25 - Suppose Roasted Pepper restaurant is considering...Ch. 25 - Priscilla Smiley manages a fleet of 250 delivery...Ch. 25 - Heavenly Dessert processes cocoa beans into cocoa...Ch. 25 - Dan Jacobs, production manager for GreenLife,...Ch. 25 - Suppose the Baseball Hall of Fame in Cooperstown,...Ch. 25 - Prob. 11ECh. 25 - Prob. 12ECh. 25 - Top managers of Video Avenue are alarmed by their...Ch. 25 - Refer to Exercise E25-13. Assume that Video Avenue...Ch. 25 - Prob. 15ECh. 25 - Moore Company sells both designer and moderately...Ch. 25 - Prob. 17ECh. 25 - Cool Systems manufactures an optical switch that...Ch. 25 - Refer to Exercise E25-18. Cool Systems needs...Ch. 25 - NaturalMaid processes organic milk into plain...Ch. 25 - Sea Blue manufactures flotation vests in...Ch. 25 - Prob. 22APCh. 25 - Members of the board of directors of Security...Ch. 25 - Brinn, located in Port St. Lucie, Florida,...Ch. 25 - Snow Ride manufactures snowboards. Its cost of...Ch. 25 - Prob. 26APCh. 25 - Prob. 27BPCh. 25 - Green Thumb operates a commercial plant nursery,...Ch. 25 - Members of the board of directors of Security Team...Ch. 25 - Prob. 30BPCh. 25 - Prob. 31BPCh. 25 - Elm Petroleum has spent 204,000 to refine 61,000...Ch. 25 - Prob. 34PCh. 25 - The Boeing Company manufacturers many different...Ch. 25 - Prob. 1EI
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