In our textbook, we learn that Disney has acquired several companies throughout the years including Marvel for $4 billion in 2009. One main advantage that this acquisition allowed Disney to do is increase the differentiation in their product offerings. They were able to add and entire line of superheroes to the Disney character family, which also allowed to add Marvel character theme park rides, toys, and other merchandise. Not only did this benefit Disney, but the acquisition also added value to Marvel. "Because of economies of scope and economies of scale, Marvel is becoming more valuable inside Disney than as a standalone enterprise" (Rothaermel).
Our question for you is, besides being able to increase their product offerings, what other benefits do you think this acquisition brought to Disney as a company?
In: Operations Management
In this module, you learned about the components involved in the effective management of operations.
This video case is about Numi Organic which is the tea of choice for high-end restaurants, hotel chains, and cruise lines.
View Numi Organic Tea: The Value Chain, IT, and E-Business (Time: 6:56. This video uses the Amara Toolbar to display captions.) and answer the following questions by providing 1-2 paragraphs for each item:
How does Numi’s relationship with third parties address operations systems elements in areas related to product-mix, capacity, facilities, and layout? What is the benefit of their approach?
Describe the technologies and tools used by Numi in managing
performance. Why did the tea maker eventually adopt a more complex
information technology system?
In: Operations Management
If a firm is producing its output where MR=MC, but is suffering (economic) losses, then it must be the case that
a) price is less than average total cost.
b) price exceeds marginal cost.
c) price is less than average variable cost.
d) price equals marginal revenue.
In: Economics
Suppose a monopolist faces consumer demand given by P=500-5Q with a constant marginal cost of $20 per unit (where marginal cost equals average total cost. assume the firm has no fixed costs). If the monopoly can only charge a single price, then it will earn profits of?
In: Economics
In: Economics
Brita Company incurred $154,000 of fixed cost and $171,600 of variable cost when 3,900 units of product were made and sold.
If the company's volume increases to 4,400 units (within relevant range), the total cost per unit will be:
A. $39.00.
B. $74.00.
C. $35.00.
D. $79.00.
In: Accounting
Veronica Mars, a recent graduate of Bell’s accounting program,
evaluated the operating performance of Dunn Company’s six
divisions. Veronica made the following presentation to Dunn’s board
of directors and suggested the Percy Division be eliminated. “If
the Percy Division is eliminated,” she said, “our total profits
would increase by $27,000.”
| The Other Five Divisions |
Percy Division |
Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Sales | $1,665,000 | $100,000 | $1,765,000 | |||||
| Cost of goods sold | 978,300 | 76,600 | 1,054,900 | |||||
| Gross profit | 686,700 | 23,400 | 710,100 | |||||
| Operating expenses | 528,100 | 50,400 | 578,500 | |||||
| Net income | $158,600 | $ (27,000 | ) | $131,600 |
In the Percy Division, cost of goods sold is $60,100 variable and
$16,500 fixed, and operating expenses are $29,200 variable and
$21,200 fixed. None of the Percy Division’s fixed costs will be
eliminated if the division is discontinued.
Is Veronica right about eliminating the Percy Division? Prepare a
schedule to support your answer. (Enter negative
amounts using either a negative sign preceding the number e.g. -45
or parentheses e.g. (45).)
| Continue | Eliminate | Net Income Increase (Decrease) |
|||||
|---|---|---|---|---|---|---|---|
| Sales | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | ||||
| Variable costs | |||||||
| Cost of goods sold | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
| Operating expenses | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
| Total variable | enter a total of the two previous amounts | enter a total of the two previous amounts | enter a total of the two previous amounts | ||||
| Contribution margin | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
| Fixed costs | |||||||
| Cost of goods sold | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
| Operating expenses | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
| Total fixed | enter a total of the two previous amounts | enter a total of the two previous amounts | enter a total of the two previous amounts | ||||
| Net income (loss) | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount |
In: Accounting
Problem 8-24 (Part Level Submission) Wright Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 50,000 timers, the company has calculated the following unit costs. Direct fixed costs include supervisory and clerical salaries and equipment depreciation.
Direct materials $13
Direct labor 5
Variable manufacturing overhead 4
Direct fixed manufacturing overhead 7 (40% salaries, 60% depreciation)
Allocated fixed manufacturing overhead 8
Total unit cost $37
Clifton Clocks has offered to provide the timer units to Wright at a price of $34 per unit. If Wright accepts the offer, the current timer unit supervisory and clerical staff will be laid off. Collapse question part
(a1) Correct answer. Your answer is correct. Calculate the total relevant cost to make or buy the timer units. (Round answers to 0 decimal places, e.g. 5,250.) Make Buy Total relevant cost $Entry field with correct answer 1240000 $Entry field with correct answer 1700000 question part (a2) Correct answer. Your answer is correct.
Assuming that Wright Water has no other use for either the facilities or the equipment currently used to manufacture the timer units, should the company accept Clifton’s offer? part
(b1) Assume that if Wright Water accepts Clifton’s offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 100,000 of the new lights each year at a price of $12. Variable costs of the lights are expected to be $7 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer.
Total relevant cost to make $ 1240000
Net relevant cost if they accept Clifton's offer $
In: Accounting
Estimated Income Statements, using Absorption and Variable Costing
Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:
| Sales (12,800 x $45) | $576,000 | ||
| Manufacturing costs (12,800 units): | |||
| Direct materials | 350,720 | ||
| Direct labor | 83,200 | ||
| Variable factory overhead | 38,400 | ||
| Fixed factory overhead | 46,080 | ||
| Fixed selling and administrative expenses | 12,500 | ||
| Variable selling and administrative expenses | 15,200 | ||
The company is evaluating a proposal to manufacture 14,400 units instead of 12,800 units, thus creating an ending inventory of 1,600 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.
a. 1. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 12,800 Units Manufactured | 14,400 Units Manufactured | |
| Sales | $ | $ |
| Cost of goods sold: | ||
| Cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total cost of goods sold | $ | $ |
| Gross profit | $ | $ |
| Selling and administrative expenses | ||
| Operating income | $ | $ |
Feedback
a. 2. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 12,800 Units Manufactured | 14,400 Units Manufactured | |
| Sales | $ | $ |
| Variable cost of goods sold: | ||
| Variable cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total variable cost of goods sold | $ | $ |
| Manufacturing margin | $ | $ |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | $ |
| Fixed costs: | ||
| Fixed factory overhead | $ | $ |
| Fixed selling and administrative expenses | ||
| Total fixed costs | $ | $ |
| Operating income | $ | $ |
In: Accounting
Estimated Income Statements, using Absorption and Variable Costing
Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:
| Sales (22,400 x $78) | $1,747,200 | ||
| Manufacturing costs (22,400 units): | |||
| Direct materials | 1,055,040 | ||
| Direct labor | 250,880 | ||
| Variable factory overhead | 116,480 | ||
| Fixed factory overhead | 138,880 | ||
| Fixed selling and administrative expenses | 37,800 | ||
| Variable selling and administrative expenses | 45,700 | ||
The company is evaluating a proposal to manufacture 24,800 units instead of 22,400 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.
a. 1. Prepare an estimated income statement, comparing operating results if 22,400 and 24,800 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 22,400 Units Manufactured | 24,800 Units Manufactured | |
| Sales | $ | $ |
| Cost of goods sold: | ||
| Cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total cost of goods sold | $ | $ |
| Gross profit | $ | $ |
| Selling and administrative expenses | ||
| Operating income | $ | $ |
a. 2. Prepare an estimated income statement, comparing operating results if 22,400 and 24,800 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 22,400 Units Manufactured | 24,800 Units Manufactured | |
| Sales | $ | $ |
| Variable cost of goods sold: | ||
| Variable cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total variable cost of goods sold | $ | $ |
| Manufacturing margin | $ | $ |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | $ |
| Fixed costs: | ||
| Fixed factory overhead | $ | $ |
| Fixed selling and administrative expenses | ||
| Total fixed costs | $ | $ |
| Operating income | $ | $ |
In: Accounting