Economic order quantity (EOQ). Tinnendo, Inc. believes it will sell 4 million zen-zens, an electronic game, this coming year. Note that this figure is for annual sales. The inventory manager plans to order zen-zens 36 times over the next year. The carrying cost is $0.02 per zen-zen per year. The order cost is $501 per order. What are the annual carrying cost, the annual ordering cost, and the optimal order quantity for the zen-zens? Verify your answer by calculating the new total inventory cost.
What is the annual carrying cost for the zen-zens? $________ (Round to the nearest dollar.)
What is the annual ordering cost for the zen-zens? $_________(Round to the nearest dollar.)
What is the optimal order quantity for the zen-zens? ________ zen-zens (Round to the nearest whole unit.)
At the EOQ, what is the new total inventory cost? $_______(Round to the nearest dollar.)
In: Finance
Dace Company manufactures two products, Product F and Product G. The company expects to produce and sell 3,200 units of Product F and 2,100 units of Product G during the current year. Data relating to the company's three activity cost pools are given below for the current year:
| Total Activity | ||||||||||||
| Activity Cost Pool | Total Cost | Product F | Product G | Total | ||||||||
| Machine setups | $ | 6,300 | 150 | setups | 150 | setups | 300 | setups | ||||
| Purchase orders | $ | 53,320 | 530 | orders | 1,190 | orders | 1,720 | orders | ||||
| Order size | $ | 64,020 | 3,620 | hours | 2,200 | hours | 5,820 | hours | ||||
Required:
Determine the overhead cost per unit for each product using the activity-based costing approach. (Do not round your intermediate calculations. Round your final answers to 2 decimal places.)
In: Accounting
Cooke Company manufactures two products, Product F and Product G. The company expects to produce and sell 1,400 units of Product F and 1,800 units of Product G during the current year. The company uses activity-based costing to compute unit product costs for external reports. Below are current year data for the company's three activity cost pools.
| Total Activity | ||||||||||
| Activity Cost Pool | Total Cost | Product F | Product G | Total | ||||||
| Machine setups | $ | 10,800 | 80 | setups | 100 | setups | 180 | setups | ||
| Purchase orders | $ | 77,520 | 510 | orders | 1,010 | orders | 1,520 | orders | ||
| General factory | $ | 75,920 | 2,240 | hours | 3,600 | hours | 5,840 | hours | ||
Required:
Using the activity-based costing approach, determine the overhead cost per unit for each product.
In: Accounting
1. Which of the following is a common barrier to entry in a monopoly market?
A. Economic profit of the monopolist.
B. Antitrust laws.
C. A rising long-run average total cost curve.
D. Economies of scale.
2.
Which of the following is true about the output level where marginal revenue equals marginal cost?
A. Economic profits are equal to zero.
B. The firm should increase its output.
C. The firm is maximizing profit.
D. The firm should reduce its output.
3. Any firm that has economies of scale will
A. Try to spread production over many plants.
B. Be able to produce at a lower unit cost as it increases production.
C. Face an upward-sloping long-run average total cost curve.
D. Prefer to produce a small amount of total industry output.
In: Economics
Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $248,000. The total cost of the Cafeteria Department is $527,000. The number of employees and the square footage in each department are as follows:
| Employees | Square Feet | |||
| Security Department | 10 | 590 | ||
| Cafeteria Department | 22 | 2,400 | ||
| Laser Department | 40 | 4,800 | ||
| Forming Department | 50 | 800 |
Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.
| Cafeteria Department |
Laser Department |
Forming Department |
|||
| Security Department cost allocation | $ | $ | $ |
In: Accounting
St. Kilda Enterprises produces parts for the electronics industry. The production manager and cost analyst reviewed the accounts for the previous month and have provided an estimated breakdown of the fixed and variable portions of manufacturing overhead.
| Fixed | Variable | Total | ||||||||||
| Indirect materials | $ | 3,200 | $ | 8,200 | $ | 11,400 | ||||||
| Indirect labor | 2,100 | 16,100 | 18,200 | |||||||||
| Supervision | 9,200 | 3,100 | 12,300 | |||||||||
| Depreciation | 36,200 | 4,200 | 40,400 | |||||||||
| Maintenance | 16,200 | 21,200 | 37,400 | |||||||||
| Total | $ | 66,900 | $ | 52,800 | $ | 119,700 | ||||||
Direct materials for the month amounted to $98,500. Direct labor for the month was $193,500. During the month, 12,500 units were produced.
Required:
a. No changes are expected in these cost
relations next month. The firm has budgeted production of 16,250
units. Provide an estimate for total production cost for next
month.
b. Determine the cost per unit of production for
the previous month and the next month.
In: Accounting
Assume that output is given by Q(L,K)=50L^0.5K^0.5 with price of labour L = w and price of capital K = r
|
a |
Use the primal formulation of minimising costs to obtain the demand for Labour L and capital K |
2 |
|
b |
Using the values of L & K obtained above, verify whether the output Q equals the one given in the question by eliminating the values of w and r. Are the primal and dual problems leading to the same answer? |
2 |
|
c |
What is the total cost for producing Q? |
1 |
|
d |
What is the average and marginal cost for producing Q? |
1 |
|
e |
If capital in the short run is fixed at Kwhat is the short-run total cost? |
1 |
|
f |
Write the values for the derivatives of the Total cost with respect to w and r. Does Shephard’s lemma hold in this case? |
1 |
In: Economics
Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $250,000. The total cost of the Cafeteria Department is $313,000. The number of employees and the square footage in each department are as follows:
| Employees | Square Feet | |||
| Security Department | 10 | 600 | ||
| Cafeteria Department | 28 | 2,400 | ||
| Laser Department | 40 | 4,800 | ||
| Forming Department | 50 | 800 |
Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.
| Cafeteria Department |
Laser Department |
Forming Department |
|||
| Security Department cost allocation | $ | $ | $ |
In: Accounting
| Capital Manufacturer, Inc. makes one model of wooden canoes. | ||||
| Partial information for it follows: | ||||
| 1) Complete the following table. | ||||
| Number of canoes produced and sold: | 500 | 700 | 850 | |
| Total Costs: | ||||
| Variable Costs | 77,000 | |||
| Fixed Costs | 180,000 | |||
| Total Costs: | ||||
| Cost per canoe: | ||||
| Variable Cost per canoe | ||||
| Fixed cost per canoe | ||||
| Total Cost per canoe | ||||
| 2) Suppose Capital sells its canoes for $600 each. | ||||
| Calculate the contribution margin per canoe and | ||||
| the contribution margin ratio | ||||
| 3) This year Capital expects to sell 900 canoes. | ||||
| Prepare a contribution margin income statement for the company. | ||||
| 4) Calculate Capital Manufacturer's break-even point in units and in sales $$$. | ||||
| 5) Suppose Capital Manufacturer wants to earn $82,000 profit this year. | ||||
| Calculate the number of canoes that must be sold to achieve this target. | ||||
In: Accounting
Javonte Co. set standards of 3 hours of direct labor per unit of
product and $16.80 per hour for the labor rate. During October, the
company uses 21,500 hours of direct labor at a $365,500 total cost
to produce 7,400 units of product. In November, the company uses
25,500 hours of direct labor at a $434,775 total cost to produce
7,800 units of product.
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
(1) Compute the direct labor rate variance, the
direct labor efficiency variance, and the total direct labor cost
variance for each of these two months. Classify each variance as
favorable or unfavorable.
(2) Javonte investigates variances of more than 5% of
actual direct labor cost. Which direct labor variances will the
company investigate further?
In: Accounting