Question

In: Accounting

Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha...

  1. Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha has found that its total maintenance costs can be represented by the following formula: Maintenance Cost = $1,850,000 + $250X, where X = Number of Heart Stents. Last year, Alisha produced 52,000 stents. Actual maintenance costs for the year were as expected.

    Required:

    If required, round your answers to the nearest cent.

    1. What is the total maintenance cost incurred by Alisha last year?

    $

    2. What is the total fixed maintenance cost incurred by Alisha last year?

    $

    3. What is the total variable maintenance cost incurred by Alisha last year?

    $

    4. What is the maintenance cost per unit produced?

    $per unit

    5. What is the fixed maintenance cost per unit?

    $per unit

    6. What is the variable maintenance cost per unit?

    $per unit

    7. Alisha management could improve its cost function to better understand past maintenance costs and predict future maintenance costs by: Identifying Additional Drivers of Maintenance Cost

Solutions

Expert Solution

1)
Total maintenance cost incurred by Alisha last year
       = $1,850,000 + $ 250X
       =   $ 1,850,000 + ($ 250 x 52,000 )
       = $1,850,000 + $ 13,000,000
$ 14,850,000
2)
Total fixed maintenance cost incurred by Alisha last year $ 1,850,000
3)
Total Variable maintenance cost incurred by Alisha last year
           = ($ 250 x 52,000 )
$ 13,000,000
4)
Maintenance cost per unit produced
             = Total maintenance cost / Units Produced
             =   $ 14,850,000 / 52,000
$ 285.58
5)
Fixed maintenance cost per unit
          = $ 1,850,000 / 52,000
$ 35.58
6)
Variable maintenance cost per unit
          = $ 13,000,000 / 52,000
$ 250
7)
Alisha management could improve its cost function to better understand past maintenance costs and predict future maintenance costs by Identifying Additional Drivers of Maintenance Cost

Related Solutions

Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha...
Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha has found that its total maintenance costs can be represented by the following formula: Maintenance Cost = $2,125,000 + $375X, where X = Number of Heart Stents. Last year, Alisha produced 75,000 stents. Actual maintenance costs for the year were as expected. Required: If required, round your answers to the nearest cent. 1. What is the total maintenance cost incurred by Alisha last year?...
Stents vs. Surgery A medical study wanted to test the claim that stent implantation was more...
Stents vs. Surgery A medical study wanted to test the claim that stent implantation was more effective than surgery for clearing neck arteries of plaque. 38.6% of the patients treated with surgery had suffered a heart attack, a stroke, or died within three years of their surgery. 41 of the 143 patients treated with stent implantation had suffered a heart attack, a stroke, or died within three years of their surgery. Test the medical study's claim at a 0.01 level...
The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, sales volume appears to...
The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, sales volume appears to be affected by changes in the price of the planes and by the state of the economy as measured by consumers' disposable personal income. The following data pertaining to Reliable's aircraft sales, selling prices, and consumers' personal income were collected: Year Aircraft Sales Average Price Disposable Constant Income (Dollars) (In constant 2006 dollars, billions) 2006 525 17,600 610 2007 450 8,000 610 2008 400...
Boston Pharmaceutical manufactures metal stents for heart patients and has budgeted sales (in units) for 2019...
Boston Pharmaceutical manufactures metal stents for heart patients and has budgeted sales (in units) for 2019 as follows: January: 50,000 February: 40,000 March 60,000 April: 50,000 May: 40,000 June: 60,000 July: 50,000 August: 40,000 Sept: 60,000 October: 50,000 Nov.: 40,000 Dec. 60,000 The company is in the process of preparing a production budget for 2019. Boston plans to maintain ending inventory levels equal to 10% of the following month's sales. The ending inventory at the end of 2018 was 5,000...
10. Exercise 3.10 The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, sales...
10. Exercise 3.10 The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, sales volume appears to be affected by changes in the price of the planes and by the state of the economy as measured by consumers' disposable personal income. The following data pertaining to Reliable's aircraft sales, selling prices, and consumers' personal income were collected: Year Aircraft Sales Average Price Disposable Constant Income (Dollars) (In constant 2006 dollars, billions) 2006 525 16,800 610 2007 450 8,000...
Cost Behavior SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its...
Cost Behavior SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = $584,685 + $1.42X, where X equals number of smokers. Last year, SmokeCity produced 21,300 smokers. Actual overhead costs for the year were as expected. Required: 2. What is the total overhead cost incurred by SmokeCity last year? $ 3. What is the total fixed overhead cost incurred by SmokeCity last...
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual...
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = $603,000 + $1.35X, where X equals number of smokers. Last year, SmokeCity produced 22,500 smokers. Actual overhead costs for the year were as expected. 2. What is the total overhead cost incurred by SmokeCity last year? $ 3. What is the total fixed overhead cost incurred by SmokeCity last year? $ 4....
. The patient was a 77-year-old female admitted with Congestive Heart Failure, and past medical history...
. The patient was a 77-year-old female admitted with Congestive Heart Failure, and past medical history of an Acute MI, four to six months before admission date. She had been taking Lasix 40mg PO BID and Cardizem 30 mg TID. In a report, I heard that her last O2 saturation was 77% on 3 liters via nasal cannula. Vital signs- afebrile, HR 108, RR 22, BP 148/88. She had an IV of D5W at KVO, the EKG was done, and...
what is medical treatment and surgery for peptic ulcer disease? medication that they use for peptic...
what is medical treatment and surgery for peptic ulcer disease? medication that they use for peptic ulcer?
Based on past experience, a bank believes that 7% of the people who receive loans will...
Based on past experience, a bank believes that 7% of the people who receive loans will not make payments on time. The bank takes a random sample of 200 recently approved loans. Check the conditions for the Central Limit Theorem. Sketch and label the distribution of the sample proportion, p. Include the mean and 3 standard deviations from the mean. What is the probability that more than 10% of these clients will not make timely payments? Find the probability that...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT