Demand for a certain product is 25,000 units/yr. Unit cost is $10.00. Holding cost rate is 30%/yr. Changeove5r (setup) time between products is 10.0 hr, and downtime cost during changeover is $150/hr. Determine (a) economic order quantity, (b) total inventory costs, and (c) total inventory cost per year as a proportion of total production costs.

Suppose that a given firm has the following total cost and marginal cost functions: C(q) = 50+5q+ 5q 2 , MC(q) = 5+10q. 2

(a) Write down expressions for the fixed cost, average fixed cost, average total cost and average variable cost associated with this production function. In addition, identify the quantity at which average total cost is minimized.

(b) Consider the restaurant industry. Provide an example of a fixed cost, variable cost, and sunk cost. Be sure to justify you answers.

1. Indicate whether each of the following is a start-up cost (S), an ongoing operating cost (O), or both (B). Remember that start-up costs include the initial period of operations as well.

1.

Entries for Materials Cost Flows in a Process Cost System

The Hershey Company manufactures chocolate confectionery products. The three largest raw materials are cocoa, sugar, and dehydrated milk. These raw materials first go into the Blending Department. The blended product is then sent to the Molding Department, where the bars of candy are formed. The candy is then sent to the Packing Department, where the bars are wrapped and boxed. The boxed candy is then sent to the distribution center, where it is eventually sold to food brokers and retailers.

Show the accounts debited and credited for each of the following business events:

a. Materials used by the Blending Department.

b. Transfer of blended product to the Molding Department.

c. Transfer of chocolate to the Packing Department.

d. Transfer of boxed chocolate to the distribution center.

e. Sale of boxed chocolate.

2.

Equivalent Units of Production

The Converting Department of Soft Touch Towel and Tissue Company had 560 units in work in process at the beginning of the period, which were 25% complete. During the period, 11,600 units were completed and transferred to the Packing Department. There were 640 units in process at the end of the period, which were 40% complete. Direct materials are placed into the process at the beginning of production.

Determine the number of equivalent units of production with respect to direct materials and conversion costs. If an amount is zero, enter in "0".

3.

Equivalent Units of Production

The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production.

a. Determine the number of units in work in process inventory at March 31.
units

b. Determine the equivalent units of production for direct materials and conversion costs in March. If an amount is zero, enter in "0".

Allergan (AGN):

corporate tax rate = 12.5%

cost of debt = 3.4867%

cost of preferred stock = 13.75/161.62 (1-0.055) = 9%

cost of common equity = 8.28%

capital structure =

Total Debt to Total Equity = 40.74

Total Debt to Total Capital = 28.95

Total Debt to Total Assets = 25.41

Interest Coverage = -0.26

Long-Term Debt to Equity = 37.51

Long-Term Debt to Total Capital = 24.87

Long-Term Debt to Assets = 0.22

Determine the weighted average cost of capital (WACC) for Allergan (AGN). Create an Excel spreadsheet where you explain how you calculated those numbers and what was your reasoning. Use the WACC as the discount rate to conduct capital budgeting analysis for a project that the firm is considering and then decide whether it should be accepted or not which is “ Building a new Building” for $1 million. Include the financial statements you used or other documents to get those numbers. If you do not have a number you need, research it and state your assumptions that you used to get the missing number.

The following cost functions apply to X Company's regular production and sales during the year:

Cost of goods sold: $7.00 (X) + $120,204

Selling and administrative expenses: $1.25 (X) + $73,776 where X is the number of units produced and sold.

During the year, X Company sold 63,600 units for $18.00 each. At the end of the year, a company offered to buy 4,820 units but was only willing to pay $11.00 each. X Company had the capacity to produce the additional 4,820 units

a.) If X Company had accepted the special order, firm profits would have increased by ______

b.) Consider the following three changes. Direct material costs on the special order would have increased by $0.85 per unit, direct labor costs on the special order would have decreased by $0.42 per unit, and X Company would have had to rent special equipment for $2,000. Independent of your answer to (5), the effect of these changes would have been to reduce profit on the special order by _______

c) In order to retain all of X Company's regular customers, it would have had to reduce the regular selling price by $0.37. If the selling price were reduced and next year's unit sales turned out to be the same as this year's sales, firm profits would have fallen by _______

The following cost functions apply to X Company's regular production and sales during the year:

  Cost of goods sold:   $6.91 (X) + $134,310

  Selling and administrative expenses:   $1.38 (X) + $64,130

where X is the number of units produced and sold. During the year, X Company sold 60,500 units for $19.00 each. At the end of the year, a company offered to buy 4,010 units but was only willing to pay $11.00 each. X Company had the capacity to produce the additional 4,010 units.

5. If X Company had accepted the special order, firm profits would have increased by

6. Consider the following three changes. Direct material costs on the special order would have increased by $0.76 per unit, direct labor costs on the special order would have decreased by $0.40 per unit, and X Company would have had to rent special equipment for $1,500. Independent of your answer to (5), the effect of these changes would have been to reduce profit on the special order by

7. In order to retain all of X Company's regular customers, it would have had to reduce the regular selling price by $0.36. If the selling price were reduced and next year's unit sales turned out to be the same as this year's sales, firm profits would have fallen by

4. Laramie Company has variable cost ratio of 0.40. The fixed cost is $66,000 and 22,000 units are sold at break-even. What is the price? What is the variable cost per unit? The contribution margin per unit? Note : Do NOT round interim computations. Round answers to the nearest cent.