Chosa Corp. manufactured 900 engines that were defective. The per unit manufacturing costs of the engines...

Chosa Corp. manufactured 900 engines that were defective. The per unit manufacturing costs of the engines were

Direct Materials. 2,700 $/ unit

DL. 1,900 $/u

VMOH. 1,100 $/u

fixed overhead. 3,600 $/u

The engines normally sell for $15,700 each. the company can rework the engines, which will cost $1,400 per unit for direct materials , $2,100 per unit for direct labor and $950 per unit for variable manufactuing overhead alternatively the company could sell rhe engine “as is “ for 11,400 each.

Required: What should Chosa Corp do to maximize for profits?

Solutions

Expert Solution

	Incremental Revenue

	900 units x ( $ 15700 - $ 11400)		$ 3,870,000.00

Less:	Incremental Costs

	Direct Material	$ 1,260,000.00
	(900 units x $ 1400)

	Direct Labor	$ 1,890,000.00
	( 900 units x $ 2100)

	VMOH	$ 855,000.00	$ 4,005,000.00
	( 900 units x $ 950)

	Gain/ (Loss) on repairing		$ (135,000.00)

	Since if the company rework the engines and then sales them,
	it'll result in a loss of $ 135,000

	Therefore, the company should sell them for $ 11400 each

ekkarill92 answered 2 years ago

Next > < Previous

Related Solutions

Suppose that 10% of the engines manufactured on a certain assembly lineare defective. If engines are...

Suppose that 10% of the engines manufactured on a certain assembly lineare defective. If engines are randomly selected one at a time and tested, (a) (4 points) Calculate the probability that two good engines will be testedbefore a defective engine is found. (b) (4 points) Calculate the probability that at least three good engineswill be tested before a defective engine is found. (c) (2 points) Calculate the expected value of the number of good enginestested before a defective engine is...

Ten percent of the engines manufactured on an assembly line are defective. If engines are randomly...

Ten percent of the engines manufactured on an assembly line are defective. If engines are randomly selected one at a time and tested a) What is the probability that the first non-defective engine will be found on the second trial? b) What is the probability that the third non-defective engine will be found i. on the fifth trial? ii. on or before the fifth trial? c. Find the mean and variance of the number(position) of the trial on which: i....

Thirty percent of the engines manufactured on an assembly line are defective. Suppose engines are randomly...

Thirty percent of the engines manufactured on an assembly line are defective. Suppose engines are randomly selected one at a time and tested. (Round your answers to three decimal places.) (a) What is the probability that the fourth nondefective engine will be found on the sixth trial? (b) What is the probability that the fourth nondefective engine will be found on or before the sixth trial?

Eighty percent of the engines manufactured on an assembly line are defective. Suppose engines are randomly...

Eighty percent of the engines manufactured on an assembly line are defective. Suppose engines are randomly selected one at a time and tested. (Round your answers to three decimal places.) (a) What is the probability that the third nondefective engine will be found on the fifth trial? (b) What is the probability that the third nondefective engine will be found on or before the fifth trial?

Sells price per unit=$200 variable manufacturing costs per unit= $50 variable S&A costs per unit= $10...

Sells price per unit=$200 variable manufacturing costs per unit= $50 variable S&A costs per unit= $10 Fixed MOH= $50,000 Fixed S&A costs=$10,000 Units produced=5000 Units sold= 4000 Produce a full absorption income statement, what is the operating income produce a variable costing income statement, what is the operating income if units produced exceeds untis sold, does full absorption accounting or varible cost account result in a higher operating income

Ahngram Corp. has 1,000 defective units of a product that cost $2.50 per unit in direct...

Ahngram Corp. has 1,000 defective units of a product that cost $2.50 per unit in direct costs and $6.00 per unit in indirect cost when produced last year. The units can be sold as scrap for $3.50 per unit or reworked at an additional cost of $2.00 and sold at full price of $10.50. The incremental net income (loss) from the choice of reworking the units would be: Multiple Choice $3,500. $0. ($2,000). $8,500. $2,000. Please explain how you get...

A company has fixed costs of $900 and a per-unit contribution margin of $3. Which of...

A company has fixed costs of $900 and a per-unit contribution margin of $3. Which of the following statements is true? ______ A) Once the break-even point is reached; the company will increase income at the rate of $3 per unit. B) Each unit "contributes" $3 toward covering the fixed costs of $900. C) Each unit "contributes" $3 toward covering the fixed costs of $900 and once the break-even point is reached, the company will increase income at the rate...

Given Sales in units 10,000 Variable manufacturing costs per unit 5 Variable administrative costs per unit...

Given Sales in units 10,000 Variable manufacturing costs per unit 5 Variable administrative costs per unit 2 Fixed manufacturing costs per unit 2 Fixed administrative costs per unit 1 Variable costs 75% of sales Selling price per unit? $2.22 $9.33 $17.50 $20 Given for XM Company the following data for January 20X1. Direct material purchased and used in production accounted for $ 50000 Units purchased 5000 The standard units 4200 Managers estimate price variance not to exceed +1% of the...

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $454,300, what...

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $454,300, what is the manufacturing cost per unit if: a. 5,900 units are manufactured and the company uses the variable costing concept? $ b. 7,700 units are manufactured and the company uses the variable costing concept? $ c. 5,900 units are manufactured and the company uses the absorption costing concept? $ d. 7,700 units are manufactured and the company uses the absorption costing concept? $

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $444,000, what...

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $444,000, what is the manufacturing cost per unit if a. 6,000 units are manufactured and the company uses the variable costing concept? $ b. 7,400 units are manufactured and the company uses the variable costing concept? $ c. 6,000 units are manufactured and the company uses the absorption costing concept? $ d. 7,400 units are manufactured and the company used the absorption costing concept?

Subjects