Question
In: Accounting
Company XYZ has two fixed price contracts for two different clients. The company has enough capacity...
Company XYZ has two fixed price contracts for two different clients. The company has enough capacity for both contracts but is uncertain whether they will be profitable.
Data as follows:
Customer AAA BBB
Component Type A999 B999
Contract Value($) $27,000 $100,000
Contract Quantity 1,000 unit 2,000 units
Material cost/unit $15 $20
Molding time/batch 5 hours 7.5 hours
Batch Size 100 units 50 units
Annual Budgeted overheads as follows:
Activity Cost Driver Cost driver Cost
volume/year pool
Molding Molding hours 2,000 $150,000
Inspection Batches 150 $75,000
Production Mgmt Contracts 20 $125,000
Calculate the activity-based costs and profits for each contract.
Company XYZ has two fixed price contracts for two different
clients. The company has enough capacity for both contracts but is
uncertain whether they will be profitable.
Data as follows:
Customer AAA BBB
Component Type A999 B999
Contract Value($) $27,000 $100,000
Contract Quantity 1,000 unit 2,000 units
Material cost/unit $15 $20
Molding time/batch 5 hours 7.5 hours
Batch Size 100 units 50 units
Annual Budgeted overheads as follows:
Activity Cost Driver Cost driver Cost
volume/year pool
Molding Molding hours 2,000 $150,000
Inspection Batches 150 $75,000
Production Mgmt Contracts 20 $125,000
Calculate the activity-based costs and profits for each
contract.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Company XYZ has two fixed price contracts for two different clients. The company has enough capacity...
Company XYZ has two fixed price contracts for two different
clients. The company has enough capacity for both contracts but is
uncertain whether they will be profitable.
Data as follows:
Customer AAA BBB
Component
Type A999 B999
Contract
Value($) $27,000 $100,000
Contract
Quantity 1,000
unit 2,000
units
Material
cost/unit $15 $20
Molding
time/batch 5
hours 7.5
hours
Batch
Size 100
units 50
units
Annual Budgeted overheads as follows:
Activity Cost
Driver Cost
driver Cost
volume/year pool
Molding Molding
hours 2,000 $150,000
Inspection Batches 150 $75,000
Production
Mgmt Contracts 20 $125,000
Calculate the activity-based costs and profits for each
contract.
Company XYZ has two fixed price contracts for two different clients. The company has enough capacity...
Company XYZ has two fixed price contracts for two different
clients. The company has enough capacity for both contracts but is
uncertain whether they will be profitable.
Data as follows:
Customer AAA BBB
Component Type A999 B999
Contract Value($) $27,000 $100,000
Contract Quantity 1,000 unit 2,000 units
Material cost/unit $15 $20
Molding time/batch 5 hours 7.5 hours
Batch Size 100 units 50 units
Annual Budgeted overheads as follows:
Activity Cost Driver Cost driver Cost
volume/year pool
Molding Molding hours...
Company XYZ has two fixed price contracts for two different clients. The company has enough capacity...
Company XYZ has two fixed price contracts for two different
clients. The company has enough capacity for both contracts but is
uncertain whether they will be profitable.
Data as follows:
Customer AAA BBB
Component
Type A999 B999
Contract
Value($) $27,000 $100,000
Contract
Quantity 1,000
unit 2,000
units
Material
cost/unit $15 $20
Molding
time/batch 5
hours 7.5
hours
Batch
Size 100
units 50
units
Annual Budgeted overheads as follows:
Activity Cost
Driver Cost
driver Cost
volume/year pool
Molding Molding
hours 2,000 $150,000
Inspection Batches 150 $75,000
Production
Mgmt Contracts 20 $125,000
Calculate the activity-based costs and profits for each
contract.
XYZ Investment company invests clients’ money across 200 different investment portfolios, each of which has been...
XYZ Investment company invests clients’ money across 200
different investment portfolios, each of which has been structured
and managed by a specialist portfolio manager. Mr Jack Nelsen, the
Director of XYZ Investment suspects that a significant difference
exists between the returns on portfolios managed by male portfolio
managers and those managed by female portfolio managers.
Mr Jack Nelsen decided to conduct an empirical study to
determine whether the returns on portfolios differ significantly
according to the gender on the portfolio...
Construction Contracts A company is constructing a bridge at a fixed price of $15 million over...
Construction Contracts
A company is constructing a bridge at a fixed price of $15
million over three years. The customer remains in control of the
bridge throughout the contract. The expected costs and billings are
provided below.
Year
1
2
3
Expected Cost
4,000,000
4,500,000
3,500,000
Billings
5,000,000
5,000,000
5,000,000
Required
Assume the percentage of completion CAN be measured
reliably.
b.
If the actual cost for Year 2 is $6,500,000 while costs for Year
1 and 3 remain unchanged:
Prepare...
Contract types are often associated with two broad categories: fixed-price contracts and cost-reimbursable contracts. Briefly identify...
Contract types are often associated with two broad categories:
fixed-price contracts and cost-reimbursable contracts. Briefly
identify the factors to consider when determining which type is
most appropriate for a planned contract.
There are 2 basic types of contracts: the fixed-price contract and the cost-plus contract. Each has...
There are 2 basic types of contracts: the fixed-price contract
and the cost-plus contract. Each has several common variations. It
is not unusual for any specific contract to have special terms and
agreements, so the basic contract is just the starting point. The
project manager is most interested in the terms that define and
help to control costs, schedule, and quality.
Among the different types of contracts, which contracts do you
think would be easiest for ADC to manage, and...
Options for company XYZ to set up production at different locations are provided below. Location Fixed...
Options for company XYZ to set up production at different
locations are provided below.
Location
Fixed Costs
Variable Costs
A
$60,000
$ 5.00
B
$50,000
$ 7.00
C
$70,000
$ 2.50
Given the fixed and variable costs for different
locations above, find the most suitable range of production for
each of the following location:
a. What is the most suitable production range for
C?
b. What is the most suitable production range for
B?
Note: format of answer would use terms
such as...
Garcia Furniture Company is a very profitable furniture manufacturer, but it always has enough idle capacity...
Garcia Furniture Company is a very profitable furniture
manufacturer,
but it always has enough idle capacity to process special orders or
re-work on existing orders.
Though it manufactures standard tables and chairs, it has
sufficient manufacturing flexibility to
accommodate occasional custom orders.
In January, it receives a custom order from Gustavo
Entertainments to deliver 150 handicapped-
accessible tables with motors (for height adjustment) at $100/unit.
Gustavo Entertainments made
a $4,000 non-refundable deposit towards the order. Garcia
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1) ABC Company has mostly fixed costs and XYZ Company has mostly variable costs. Which company...
1) ABC Company has mostly fixed costs and XYZ Company has mostly
variable costs. Which company has the greatest risk of a net loss?
Why?
2) Briefly explain the concept of sensitivity analysis.
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