Question
In: Accounting
Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two...
Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses the vendor based on price. Once the plastic is received, it is inspected to ensure that it is suitable for production. Plastic that is deemed unsuitable is disposed of.
The controller at Kinnear collected the following information on
purchases for the past year:
| Tappan | Hill | |
| Total purchases (tons) | 4,000 | 7,000 |
| Plastic discarded | 140 | 350 |
The purchasing manager has just received bids on an order for 250 tons of plastic from both Tappan and Hill. Tappan bid $1,544 and Hill bid $1,539 per ton.
1-a. Assume that the average quality, measured by the amounts discarded from the two companies, will continue as in the past. What is the effective cost per ton for both Tappan and Hill? (Do not round intermediate calculations.)
Required:
2.a. Assume all else remains the same. What bid by Tappan would make Kinnear indifferent between buying from Tappan or Hill? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two...
Kinnear Plastics manufactures various components for the
aircraft and marine industry. Kinnear buys plastic from two
vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses
the vendor based on price. Once the plastic is received, it is
inspected to ensure that it is suitable for production. Plastic
that is deemed unsuitable is disposed of.
The controller at Kinnear collected the following information on
purchases for the past year:
Tappan
Hill
Total purchases (tons)
4,500
7,500
Plastic discarded
135
375
The purchasing...
Ratios Compared with Industry Averages Packard Plastics, Inc., manufactures various plastic and synthetic products. Financial statement...
Ratios Compared with Industry Averages
Packard Plastics, Inc., manufactures various plastic and synthetic
products. Financial statement data for the firm follow:
2013
(Thousands of Dollars,
Except Earnings per Share)
Sales revenue
$896,500
Cost of goods sold
594,000
Net income
55,550
Dividends
15,400
Earnings per share
4.04
Packard Plastics, inc.
Balance Sheets
(Thousands of Dollars)
Dec. 31, 2013
Dec. 31, 2012
Assets
Cash
$4,510
$2,700
Accounts receivable (net)
73,590
60,900
Inventory
148,000
140,000
Total Current Assets
219,000
203,600
Plant assets (net)...
Ratios Compared with Industry Averages Packard Plastics, Inc., manufactures various plastic and synthetic products. Financial statement...
Ratios Compared with Industry Averages
Packard Plastics, Inc., manufactures various plastic and synthetic
products. Financial statement data for the firm follow:
2013
(Thousands of Dollars,
Except Earnings per Share)
Sales revenue
$978,000
Cost of goods sold
648,000
Net income
60,600
Dividends
16,800
Earnings per share
4.04
Packard Plastics, inc.
Balance Sheets
(Thousands of Dollars)
Dec. 31, 2013
Dec. 31, 2012
Assets
Cash
$4,920
$2,700
Accounts receivable (net)
80,280
60,900
Inventory
177,600
140,000
Total Current Assets
219,000
203,600
Plant assets (net)...
Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry....
Piscataway Plastics Company manufactures a highly specialized
plastic that is used extensively in the automobile industry. The
following data have been compiled for the month of June. Conversion
activity occurs uniformly throughout the production process.
Work in process,
June 1—40,000 units:
Direct material:
100% complete, cost of
$
219,500
Conversion: 40%
complete, cost of
61,800
Balance in work in
process, June 1
$
281,300
Units started during
June
220,000
Units completed
during June and transferred out to finished-goods inventory
190,000...
Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry....
Piscataway Plastics Company manufactures a highly specialized
plastic that is used extensively in the automobile industry. The
following data have been compiled for the month of June. Conversion
activity occurs uniformly throughout the production process.
Work in process, June 1—60,000 units:
Direct material: 100% complete, cost of
$
292,500
Conversion: 40% complete, cost of
159,200
Balance in work in process, June 1
$
451,700
Units started during June
240,000
Units completed during June and transferred out to
finished-goods inventory
190,000...
Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry....
Piscataway Plastics Company manufactures a highly specialized
plastic that is used extensively in the automobile industry. The
following data have been compiled for the month of June. Conversion
activity occurs uniformly throughout the production process.
Work in process, June 1—60,000 units:
Direct material: 100% complete, cost of
$
292,500
Conversion: 40% complete, cost of
159,200
Balance in work in process, June 1
$
451,700
Units started during June
240,000
Units completed during June and transferred out to
finished-goods inventory
190,000...
Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry....
Piscataway Plastics Company manufactures a highly specialized
plastic that is used extensively in the automobile industry. The
following data have been compiled for the month of June. Conversion
activity occurs uniformly throughout the production process.
Work in process, June 1—40,000 units:
Direct material: 100% complete, cost of
$
155,500
Conversion: 40% complete, cost of
25,200
Balance in work in process, June 1
$
180,700
Units started during June
200,000
Units completed during June and transferred out to
finished-goods inventory
190,000...
Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry....
Piscataway Plastics Company manufactures a highly specialized
plastic that is used extensively in the automobile industry. The
following data have been compiled for the month of June. Conversion
activity occurs uniformly throughout the production process.
Work in process, June 1—60,000 units:
Direct material: 100% complete, cost of
$
285,000
Conversion: 40% complete, cost of
174,800
Balance in work in process, June 1
$
459,800
Units started during June
240,000
Units completed during June and transferred out to
finished-goods inventory
200,000...
[The following information applies to the questions displayed below.] Kinnear Plastics manufactures various components for the...
[The following information applies to the questions
displayed below.]
Kinnear Plastics manufactures various components for the
aircraft and marine industry. Kinnear buys plastic from two
vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses
the vendor based on price. Once the plastic is received, it is
inspected to ensure that it is suitable for production. Plastic
that is deemed unsuitable is disposed of.
The controller at Kinnear collected the following information on
purchases for the past year:
Tappan
Hill
Total purchases...
Genie in a Bottle Company (GBC) manufactures plastic two-liter bottles for the beverage industry. The cost...
Genie in a Bottle Company (GBC) manufactures plastic two-liter
bottles for the beverage industry. The cost standards per 100
two-liter bottles are as follows: Cost Category Standard Cost per
100 Two-Liter Bottles Direct labor $1.48 Direct materials 4.92
Factory overhead 0.28 Total $6.68 At the beginning of July, GBC
management planned to produce 590,000 bottles. The actual number of
bottles produced for July was 637,200 bottles. The actual costs for
July of the current year were as follows: Cost Category...
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