MANAGERIAL ACCOUNTING-CUSTOM EBOOK>I<
12th Edition
ISBN: 9781307661217
Author: HILTON
Publisher: INTER MCG2
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Question
Chapter 7, Problem 37P
1.
To determine
Calculate the net income of H Company and determine the required sale to double the net income.
2.
To determine
Calculate the break-even point, if operations are shifted to M city.
3 a.
To determine
Calculate the changes in fixed cost.
3 b.
To determine
Calculate the changes in variable cost.
4.
To determine
Identify the impact due to the changes in given operating costs.
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The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production:
a. Annual additional tooling costs $250,000 annually.
b. Average inventory would decline by 80% from the current level of $1,000,000.
c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%.
d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs.
e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year.
The Knot’s required rate of return on inventory investment is 15% per year.
Q. Calculate the net benefit or cost to The Knot if it adopts JIT production at the Spartanburg plant.
The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production:
a. Annual additional tooling costs $250,000 annually.
b. Average inventory would decline by 80% from the current level of $1,000,000.
c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%.
d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs.
e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year.
The Knot’s required rate of return on inventory investment is 15% per year.
Q. Suppose The Knot implements JIT production at its Spartanburg plant. Give examples of performance measures The Knot could use to evaluate and control JIT…
Applesoft produces tablets, laptops and televisions. Applesoft typically sells 1,000 tablets a year. The tablet information is as follows:
Selling price per unit
$60
Direct material cost per unit
Direct labor cost per unit
Total allocated overhead (1/4 avoidable if eliminate tablets) $80,000
One fourth of the allocated overhead would be avoidable if the tablets were eliminated.
How much would Operating Income change by if Applesoft were to eliminate the tablets?
Be sure to include "-" in front of your amount if net income will decrease
$30
$15
Chapter 7 Solutions
MANAGERIAL ACCOUNTING-CUSTOM EBOOK>I<
Ch. 7 - Prob. 1RQCh. 7 - What is the meaning of the term unit contribution...Ch. 7 - What information is conveyed by a...Ch. 7 - What does the term safety margin mean?Ch. 7 - Prob. 5RQCh. 7 - Delmarva Oyster Company has been able to decrease...Ch. 7 - In a strategy meeting, a manufacturing companys...Ch. 7 - What will happen to a companys break-even point if...Ch. 7 - Prob. 9RQCh. 7 - How can a profit-volume graph be used to predict a...
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