Outsource Tortillas Proposal: The company spent a total of $2,000,000 producing tortillas during the past year....

Outsource Tortillas Proposal: The company spent a total of $2,000,000 producing tortillas during the past year. The tortillas are made at a company owned facility. A vendor has offered to supply a similar quantity and grade of tortillas for $2,200,000. Staff recommends continuing to make tortillas because the proposed purchase price is 10% higher than the cost of making tortillas. Staff believes it is inappropriate to consider that the tortilla facility could be leased to another company for $350,000, if it is diverted from tortilla production. Perform a side by side comparison. On one side show the results of accepting the recommendation and on the other side show the rejection of the recommendation. Write up your approach to your analysis and your conclusion (your decision and why). Show all your work.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The Metro restaurant during fiscal year 2017 spent a total of $ 333,512.02 on food purchases...

The Metro restaurant during fiscal year 2017 spent a total of $ 333,512.02 on food purchases for its operation and obtained $ 1,239,453.22 in total sales for the same period, of which $ 987,398.32 were on food sales and $ 252,054.90 on beverage sales. How much is the percentage of food cost ?:

Maggie's Muffins Bakery generated $2,000,000 in sales during 2016, and its year-end total assets were $1,500,000....

Maggie's Muffins Bakery generated $2,000,000 in sales during 2016, and its year-end total assets were $1,500,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2017, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 5%, and its payout ratio will be 40%....

Awesome Cookie Company had total credit sales for the past year of $800,000. As of year-end,...

Awesome Cookie Company had total credit sales for the past year of $800,000. As of year-end, but before estimating bad debts, the company had a $70,000 debit balance in accounts receivable and a $600 debit balance in the Allowance for Uncollectible Accounts. The company provided the following aging of accounts receivable schedule and estimates of the bad debts percentages: Age Amount Bad debt Percentage 1-30 days 38,500 10% 31-60 days 21,000 25% 61-90 days 6,300 40% Over...

Alard Company produces blenders and coffee makers. During the past year, the company produced and sold...

Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled $340,000, of which $184,000 can be avoided if the blenders are not produced and $142,500 can be avoided if the coffee makers are not produced. Revenue and variable cost information follows: Blenders Coffee Makers Selling price per appliance $24 $29 Variable expenses per appliance 18 27 Required: 1. Prepare segmented income statements. Separate...

During the past year, a company had cash flow to creditors, an operating cash flow, and...

During the past year, a company had cash flow to creditors, an operating cash flow, and net capital spending of $30,817, $70,361, and $31,140, respectively. The net working capital at the beginning of the year was $12,526 and it was $14,950 at the end of the year. What was the company's cash flow to stockholders during the year? Multiple Choice $2,424 $10,828 $5,980 $4,234

United Pigpen is considering a proposal to manufacture high-protein hog feed. The company spent $20,000 to...

United Pigpen is considering a proposal to manufacture high-protein hog feed. The company spent $20,000 to do market research on potential products. The project would require use of an existing warehouse, which is currently rented out to a neighboring firm. The next year’s rental charge on the warehouse is $100,000 (after taxt), and thereafter, the rent is expected to grow in line with inflation at 4% a year. In addition to using the warehouse, the proposal envisages an investment in...

Company has determined that they can increase their profitability by $80,000 per year if they outsource...

Company has determined that they can increase their profitability by $80,000 per year if they outsource the production of some parts used to build their most popular product. A significant amount of the cost savings will come from reduced labor force. This includes some long-term employees that served as quality-control inspectors. The parts being outsourced are difficult to manufacture and critical to the performance of the machine where they get installed. The inspectors were highly paid and very proficient at...

JenSteel, Inc., had the following results for last year: Total Per Unit Sales $ 2,000,000 $ &nbsp

JenSteel, Inc., had the following results for last year: Total Per Unit Sales $ 2,000,000 $ 40.00 Variable Costs 1,250,000 25.00 Contribution Margin $ 750,000 $ 15.00 Fixed Costs 400,000 Operating Income $ 350,000 Prepare a new income statement for each of the following scenarios. Consider each scenario independently. Sales volume increases by 10% The sales price decreases by 5%. Variable costs per unit decrease by $1.50. A new advertising campaign costing $90,000 increases sales volume by...

Langdon Company produced 9,600 units during the past year, but only 8,400 of the units were...

Langdon Company produced 9,600 units during the past year, but only 8,400 of the units were sold. The following additional information is also available. Direct materials used $76,100 Direct labor incurred $32,000 Variable manufacturing overhead $21,500 Fixed manufacturing overhead $38,400 Fixed selling and administrative expenses $70,000 Variable selling and administrative expenses $10,000 There was no work in process inventory at the beginning and end of the year, nor did Langdon have any beginning finished goods inventory. What would be Langdon...

MNBA is a company that sells chem-lab supplies. In the past, customers had spent an average...

MNBA is a company that sells chem-lab supplies. In the past, customers had spent an average of $6,800 annually, but management believes that the number has decreased in the last year. In order to test this, one manager looks at a sample of 40 customers' spending last year. The results can be found in the file ASpending, Hypothesis Testing. The manager would like to test her hypothesis at an alpha level of 0.1. She also believes that the standard deviation...

Subjects