1. The Soft Toys Company has collected information on fixed and variable costs for four potential plant locations.
Location | Annual Fixed Cost | Unit Variable Cost |
A B C D | $200,000 $300,000 $400,000 $600,000 | $70 $65 $45 $40 |
a. Plot the total cost curves for the four plant locations on a
single graph (Use Excel or hand-drawing).
Hint: You can start with different Q (output quantity) such as 0,
5000, 10000, 15000, etc. and record responding total costs of each
location. Accordingly, you can draw a line of each location on
Excel worksheet (hand-drawing is fine) while X-axis is Q and Y axis
is total cost.
b. Compute the range of demand for which location has the best cost advantage (the least total cost).
c. Which plant location is best if demand is 30,000 units?
In: Operations Management
A company uses a perpetual inventory system. The company's beginning inventory of shoes and the purchases during a month as as follows:
Beginning Inventory Jan 1: 16 pairs at $10 ea
Purchase Jan 11: 14 pairs @ $12 ea
Purchase Jan 20: 23 pairs at $15 ea
On Jan 14 the company sold 25 units of shoes. The other 28 units remained in inventory at Jan 31.
Question 1: Assuming the company uses the average cost flow assumption what is the cost of goods sold to be recorded on Jan 14 (round to the nearest cent).
cost per unit=total cost available for sale/total units available for sale
328/30=10.9
23*10.9=250.7
Question 2: The total cost of goods available for sale is $673. Assuming average cost flow what would the ending inventory be on Jan 31?
COGS/Total pairs available for sale?
In: Accounting
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Santos Company currently manufactures one of its crucial parts at a cost of $4.80 per unit. This cost is based on a normal production rate of 80,000 units per year. Variable costs are $3.30 per unit, fixed costs related to making this part are $80,000 per year, and allocated fixed costs are $40,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Santos is considering buying the part from a supplier for a quoted price of $3.30 per unit guaranteed for a three-year period. |
| Calculate the total incremental cost of making 80,000 units. (Omit the "$" sign in your response.) |
| Total incremental cost | $ |
| Calculate the total incremental cost of buying 80,000 units. (Omit the "$" sign in your response.) |
| Total incremental cost | $ |
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Should the company continue to manufacture the part, or should it buy the part from the outside supplier? |
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In: Accounting
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Santos Company currently manufactures one of its crucial parts at a cost of $5.20 per unit. This cost is based on a normal production rate of 70,000 units per year. Variable costs are $3.70 per unit, fixed costs related to making this part are $70,000 per year, and allocated fixed costs are $35,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Santos is considering buying the part from a supplier for a quoted price of $2.90 per unit guaranteed for a three-year period. |
| Calculate the total incremental cost of making 70,000 units. (Omit the "$" sign in your response.) |
| Total incremental cost | $ |
| Calculate the total incremental cost of buying 70,000 units. (Omit the "$" sign in your response.) |
| Total incremental cost | $ |
|
Should the company continue to manufacture the part, or should it buy the part from the outside supplier? |
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In: Accounting
Consider the following information about perfectly competitive firms selling milk.
Demand in the market is shown in the table below
|
Price ($) |
Quantity Demanded (gallons) |
Total Cost ($) |
|
18 |
300 |
$50 |
|
14 |
400 |
$160 |
|
10 |
500 |
$125 |
|
6 |
600 |
$145 |
|
2 |
700 |
$170 |
Each producer in the market has the following costs
|
Quantity (gallons) |
Total Cost ($) |
Average Total Cost ($/gallon) |
Marginal Cost ($) |
|
0 |
9 |
||
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1 |
10 |
||
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2 |
13 |
||
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3 |
18 |
||
|
4 |
25 |
||
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5 |
34 |
a. Compute each producer’s marginal cost and average total cost for 1 to 5 gallons.
b. The price of a gallon of milk is now $10. How many gallons are sold? How many gallons does each producer make? How many producers are there? How much profit does each producer earn?
c. Is the situation described in part (b) a long-run equilibrium? Why or why not?
In: Economics
Include graph interpretation below the graph. Make sure it is clear, complete, and easy to find.
A manager is trying to determine which of three production processes to implement to produce a component for a new product line. Process A would entail a variable cost of $17 per unit and an annual fixed cost of $150,000. Process B would entail a variable cost of $11 per unit and an annual fixed cost of $250,000. Process C would entail a variable cost of $20 per unit and an annual fixed cost of $180,000.
a. Develop three separate models in your spreadsheet to calculate Total cost for each process.
The models must be flexible and able to calculate Total cost for any Quantity produced.
b. Create a Cost-Volume graph that shows total cost lines for all three options.
(Volume should range from 0 to 30,000)
c. Write an interpretation of your graph
In: Accounting
Include graph interpretation below the graph. Make sure it is clear, complete, and easy to find. A manager is trying to determine which of three production processes to implement to produce a component for a new product line. Process A would entail a variable cost of $17 per unit and an annual fixed cost of $150,000. Process B would entail a variable cost of $11 per unit and an annual fixed cost of $250,000. Process C would entail a variable cost of $20 per unit and an annual fixed cost of $180,000. a. Develop three separate models in your spreadsheet to calculate Total cost for each process. The models must be flexible and able to calculate Total cost for any Quantity produced. b. Create a Cost-Volume graph that shows total cost lines for all three options. (Volume should range from 0 to 30,000) c. Write an interpretation of your graph
In: Operations Management
1. The Bergen Company and the Gutenberg Company are the only
two firms that produce and sell a particular kind of machinery. The
demand curve for their product is P= 580-3Q where P is the price of
the product and Q is the total amount demanded. The total cost
function of the Bergen Company is
TCB = 410QB where TCB is its total cost and QB is its output. The total cost function of the Gutenberg Company is TCG= 460QG where TCGis its total cost and QG is its output. There are competing for a new market.
b) If only one firm enters a new market, how much will each firm produce and will make the profit?
c) If both enter the new market, how much will each firm produce and will make the profit?
d) Complete the game table matrix with the payoffs. What is the Nash EQ?
g) Is this collusion would work? Why or why not?
In: Economics
1.
The following data relate to factory overhead cost for the production of 6,000 computers:
| Actual: | Variable factory overhead | $163,000 |
| Fixed factory overhead | 70,000 | |
| Standard: | 6,000 hrs. at $35 | 210,000 |
If productive capacity of 100% was 10,000 hours and the total factory overhead cost budgeted at the level of 6,000 standard hours was $238,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $7 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Variance | Amount | Favorable/Unfavorable |
| Variable factory overhead controllable variance | $ | |
| Fixed factory overhead volume variance | ||
| Total factory overhead cost variance | $ |
2.
Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 5,600 units of product were as follows:
| Standard Costs | Actual Costs | ||
| Direct materials | 7,300 lb. at $4.60 | 7,200 lb. at $4.40 | |
| Direct labor | 1,400 hrs. at $18.30 | 1,430 hrs. at $18.70 | |
| Factory overhead | Rates per direct labor hr., | ||
| based on 100% of normal | |||
| capacity of 1,460 direct | |||
| labor hrs.: | |||
| Variable cost, $3.00 | $4,160 variable cost | ||
| Fixed cost, $4.70 | $6,862 fixed cost | ||
Each unit requires 0.25 hour of direct labor.
Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Direct materials price variance | $ | |
| Direct materials quantity variance | ||
| Total direct materials cost variance | $ |
b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Direct labor rate variance | $ | |
| Direct labor time variance | ||
| Total direct labor cost variance | $ |
c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Variable factory overhead controllable variance | $ | |
| Fixed factory overhead volume variance | ||
| Total factory overhead cost variance | $ |
In: Accounting
[The following information applies to the questions displayed below.]
During April, the production department of a process manufacturing
system completed a number of units of a product and transferred
them to finished goods. Of these transferred units, 62,000 were in
process in the production department at the beginning of April and
248,000 were started and completed in April. April's beginning
inventory units were 70% complete with respect to materials and 30%
complete with respect to conversion. At the end of April, 84,000
additional units were in process in the production department and
were 90% complete with respect to materials and 40% complete with
respect to conversion.
1. Compute the number of units transferred to
finished goods.
2. Compute the number of equivalent units with
respect to both materials used and conversion used in the
production department for April using the weighted-average
method.
Compute the number of units transferred to finished goods.
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Compute the number of equivalent units with respect to both materials used and conversion used in the production department for April using the weighted-average method.
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The production department had $817,858 of direct materials and
$689,000 of conversion costs charged to it during April. Also, its
beginning inventory of $159,422 consists of $126,862 of direct
materials cost and $32,560 of conversion costs.
1&2. Using the weighted-average method,
compute the direct materials cost and the conversion cost per
equivalent unit and assign April's costs to the department’s
output. (Round "Cost per EUP" to 2 decimal
places.)
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In: Accounting