Provide both your answer and a brief explanation.
| Units Produced | Total Variable Cost |
| 1 | $198 |
| 2 | $392 |
| 3 | $583 |
| 4 | $770 |
| 5 | $953 |
| 6 | $1,133 |
| 7 | $1,311 |
| 8 | $1,485 |
| 9 | $1,656 |
| 10 | $1,825 |
| 11 | $1,991 |
| 12 | $2,155 |
| 13 | $2,317 |
| 14 | $2,477 |
| 15 | $2,634 |
| 16 | $2,790 |
In: Economics
Physical Units Method, Relative Sales-Value-at-Split-off Method, Net Realizable Value Method, Decision Making
Sonimad Sawmill, Inc. (SSI), purchases logs from independent timber contractors and processes them into the following three types of lumber products:
These products are the result of a joint sawmill process that involves removing bark from the logs, cutting the logs into a workable size (ranging from 8 to 16 feet in length), and then cutting the individual products from the logs, depending upon the type of wood (pine, oak, walnut, or maple) and the size (diameter) of the log.
The joint process results in the following costs and output of products during a typical month:
| Joint production costs: | |
| Materials (rough timber logs) | $500,000 |
| Debarking (labor and overhead) | 50,000 |
| Sizing (labor and overhead) | 200,000 |
| Product cutting (labor and overhead) | 260,000 |
| Total joint costs | $1,010,000 |
Product yield and average sales value on a per-unit basis from the joint process are as follows:
| Product | Monthly Output |
Fully Processed Sales Price |
| Studs | 70,000 | $8 |
| Decorative pieces | 5,000 | 100 |
| Posts | 25,000 | 20 |
The studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing by SSI. Also, the posts require no further processing. The decorative pieces must be planed and further sized after emerging from the SSI sawmill. This additional processing costs SSI $120,000 per month and normally results in a loss of 10 percent of the units entering the process. Without this planing and sizing process, there is still an active intermediate market for the unfinished decorative pieces where the sales price averages $60 per unit.
Required:
1. Based on the information given for Sonimad Sawmill, Inc., allocate the joint processing costs of $1,010,000 to each of the three product lines using the:
a. Relative sales-value-at-split-off method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Monthly Unit Output |
Sales Price per Unit |
Relative Sales
Value at Split-Off |
Percent of Sales |
Allocated Joint Costs |
||
| Studs | % | |||||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | % |
(Note: Difference due to rounding.)
b. Physical units method at split-off.
Units |
Percent |
x |
Joint Cost |
= |
Allocated Joint Costs |
|
| Studs | ||||||
| Decorative pieces | ||||||
| Posts | ||||||
| Total |
c. Estimated net realizable value method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Fully Processed
Monthly Unit Output |
Sales Price per Unit |
Net Realizable Value |
Percent of Value |
Estimated
Allocated Joint Costs |
||
| Studs | % | |||||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | % |
(Note: Difference due to rounding.)
2. Prepare an analysis for Sonimad Sawmill, Inc., to compare processing the decorative pieces further as it presently does, with selling the rough-cut product immediately at split-off.
| Sonimad Sawmill, Inc. | |
| Analysis Report | |
| Monthly unit output | |
| Final sales value | |
| Differential revenue | |
| Additional contribution from further processing | |
In: Accounting
Physical Units Method, Relative Sales-Value-at-Split-off Method, Net Realizable Value Method, Decision Making
Sonimad Sawmill, Inc. (SSI), purchases logs from independent timber contractors and processes them into the following three types of lumber products:
These products are the result of a joint sawmill process that involves removing bark from the logs, cutting the logs into a workable size (ranging from 8 to 16 feet in length), and then cutting the individual products from the logs, depending upon the type of wood (pine, oak, walnut, or maple) and the size (diameter) of the log.
The joint process results in the following costs and output of products during a typical month:
| Joint production costs: | |
| Materials (rough timber logs) | $500,000 |
| Debarking (labor and overhead) | 50,000 |
| Sizing (labor and overhead) | 200,000 |
| Product cutting (labor and overhead) | 250,000 |
| Total joint costs | $1,000,000 |
Product yield and average sales value on a per-unit basis from the joint process are as follows:
| Product | Monthly Output |
Fully Processed Sales Price |
| Studs | 75,000 | $8 |
| Decorative pieces | 5,000 | 100 |
| Posts | 20,000 | 20 |
The studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing by SSI. Also, the posts require no further processing. The decorative pieces must be planed and further sized after emerging from the SSI sawmill. This additional processing costs SSI $100,000 per month and normally results in a loss of 10 percent of the units entering the process. Without this planing and sizing process, there is still an active intermediate market for the unfinished decorative pieces where the sales price averages $60 per unit.
Required:
1. Based on the information given for Sonimad Sawmill, Inc., allocate the joint processing costs of $1,000,000 to each of the three product lines using the:
a. Relative sales-value-at-split-off method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Monthly Unit Output |
Sales Price per Unit |
Relative Sales
Value at Split-Off |
Percent of Sales |
Allocated Joint Costs |
||
| Studs | $ | $ | % | $ | ||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | $ | % | $ |
b. Physical units method at split-off.
Units |
Percent |
x |
Joint Cost |
= |
Allocated Joint Costs |
|
| Studs | % | $ | $ | |||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | $ |
c. Estimated net realizable value method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Fully Processed
Monthly Unit Output |
Sales Price per Unit |
Net Realizable Value |
Percent of Value |
Estimated
Allocated Joint Costs |
||
| Studs | $ | $ | % | $ | ||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | $ | % | $ |
2. Prepare an analysis for Sonimad Sawmill, Inc., to compare processing the decorative pieces further as it presently does, with selling the rough-cut product immediately at split-off.
| Sonimad Sawmill, Inc. | |
| Analysis Report | |
| Monthly unit output | |
| Final sales value | $ |
| Differential revenue | $ |
| Additional contribution from further processing | $ |
In: Accounting
Physical Units Method, Relative Sales-Value-at-Split-off Method, Net Realizable Value Method, Decision Making
Sonimad Sawmill, Inc. (SSI), purchases logs from independent timber contractors and processes them into the following three types of lumber products:
These products are the result of a joint sawmill process that involves removing bark from the logs, cutting the logs into a workable size (ranging from 8 to 16 feet in length), and then cutting the individual products from the logs, depending upon the type of wood (pine, oak, walnut, or maple) and the size (diameter) of the log.
The joint process results in the following costs and output of products during a typical month:
| Joint production costs: | |
| Materials (rough timber logs) | $500,000 |
| Debarking (labor and overhead) | 50,000 |
| Sizing (labor and overhead) | 200,000 |
| Product cutting (labor and overhead) | 250,000 |
| Total joint costs | $1,000,000 |
Product yield and average sales value on a per-unit basis from the joint process are as follows:
| Product | Monthly Output |
Fully Processed Sales Price |
| Studs | 75,000 | $8 |
| Decorative pieces | 5,000 | 100 |
| Posts | 20,000 | 20 |
The studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing by SSI. Also, the posts require no further processing. The decorative pieces must be planed and further sized after emerging from the SSI sawmill. This additional processing costs SSI $100,000 per month and normally results in a loss of 10 percent of the units entering the process. Without this planing and sizing process, there is still an active intermediate market for the unfinished decorative pieces where the sales price averages $60 per unit.
Required:
1. Based on the information given for Sonimad Sawmill, Inc., allocate the joint processing costs of $1,000,000 to each of the three product lines using the:
a. Relative sales-value-at-split-off method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Monthly Unit Output |
Sales Price per Unit |
Relative Sales
Value at Split-Off |
Percent of Sales |
Allocated Joint Costs |
||
| Studs | % | |||||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | % | |||||
b. Physical units method at split-off.
Units |
Percent |
x |
Joint Cost |
= |
Allocated Joint Costs |
|
| Studs | ||||||
| Decorative pieces | ||||||
| Posts | ||||||
| Total |
c. Estimated net realizable value method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Fully Processed
Monthly Unit Output |
Sales Price per Unit |
Net Realizable Value |
Percent of Value |
Estimated
Allocated Joint Costs |
||
| Studs | ||||||
| Decorative pieces | ||||||
| Posts | ||||||
| Total |
2. Prepare an analysis for Sonimad Sawmill, Inc., to compare processing the decorative pieces further as it presently does, with selling the rough-cut product immediately at split-off.
| Sonimad Sawmill, Inc. | |
| Analysis Report | |
| Monthly unit output | |
| Final sales value | |
| Differential revenue | |
| Additional contribution from further processing | |
In: Accounting
Physical Units Method, Relative Sales-Value-at-Split-off Method, Net Realizable Value Method, Decision Making Sonimad Sawmill, Inc. (SSI), purchases logs from independent timber contractors and processes them into the following three types of lumber products: Studs for residential construction (e.g., walls and ceilings) Decorative pieces (e.g., fireplace mantels and beams for cathedral ceilings) Posts used as support braces (e.g., mine support braces and braces for exterior fences around ranch properties) These products are the result of a joint sawmill process that involves removing bark from the logs, cutting the logs into a workable size (ranging from 8 to 16 feet in length), and then cutting the individual products from the logs, depending upon the type of wood (pine, oak, walnut, or maple) and the size (diameter) of the log. The joint process results in the following costs and output of products during a typical month: Joint production costs: Materials (rough timber logs) $500,000 Debarking (labor and overhead) 50,000 Sizing (labor and overhead) 200,000 Product cutting (labor and overhead) 260,000 Total joint costs $1,010,000 Product yield and average sales value on a per-unit basis from the joint process are as follows: Product Monthly Output Fully Processed Sales Price Studs 80,000 $8 Decorative pieces 5,000 100 Posts 15,000 20 The studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing by SSI. Also, the posts require no further processing. The decorative pieces must be planed and further sized after emerging from the SSI sawmill. This additional processing costs SSI $120,000 per month and normally results in a loss of 10 percent of the units entering the process. Without this planing and sizing process, there is still an active intermediate market for the unfinished decorative pieces where the sales price averages $60 per unit. Required: 1. Based on the information given for Sonimad Sawmill, Inc., allocate the joint processing costs of $1,010,000 to each of the three product lines using the: a. Relative sales-value-at-split-off method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent. Monthly Unit Output Sales Price per Unit Relative Sales Value at Split-Off Percent of Sales Allocated Joint Costs Studs $ $ % $ Decorative pieces % Posts % Total $ % $ (Note: Difference due to rounding.) b. Physical units method at split-off. Units Percent x Joint Cost = Allocated Joint Costs Studs % $ $ Decorative pieces % Posts % Total $ c. Estimated net realizable value method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent. Fully Processed Monthly Unit Output Sales Price per Unit Net Realizable Value Percent of Value Estimated Allocated Joint Costs Studs $ $ % $ Decorative pieces % Posts % Total $ % $ (Note: Difference due to rounding.) 2. Prepare an analysis for Sonimad Sawmill, Inc., to compare processing the decorative pieces further as it presently does, with selling the rough-cut product immediately at split-off. Sonimad Sawmill, Inc. Analysis Report Monthly unit output Final sales value $ Differential revenue $ Additional contribution from further processing $
In: Accounting
Physical Units Method, Relative Sales-Value-at-Split-off Method, Net Realizable Value Method, Decision Making
Sonimad Sawmill, Inc. (SSI), purchases logs from independent timber contractors and processes them into the following three types of lumber products:
These products are the result of a joint sawmill process that involves removing bark from the logs, cutting the logs into a workable size (ranging from 8 to 16 feet in length), and then cutting the individual products from the logs, depending upon the type of wood (pine, oak, walnut, or maple) and the size (diameter) of the log.
The joint process results in the following costs and output of products during a typical month:
| Joint production costs: | |
| Materials (rough timber logs) | $500,500 |
| Debarking (labor and overhead) | 60,050 |
| Sizing (labor and overhead) | 200,000 |
| Product cutting (labor and overhead) | 261,000 |
| Total joint costs | $1,020,000 |
Product yield and average sales value on a per-unit basis from the joint process are as follows:
| Product | Monthly Output |
Fully Processed Sales Price |
| Studs | 70,000 | $8 |
| Decorative pieces | 5,000 | 100 |
| Posts | 25,000 | 20 |
The studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing by SSI. Also, the posts require no further processing. The decorative pieces must be planed and further sized after emerging from the SSI sawmill. This additional processing costs SSI $120,000 per month and normally results in a loss of 10 percent of the units entering the process. Without this planing and sizing process, there is still an active intermediate market for the unfinished decorative pieces where the sales price averages $60 per unit.
Required:
1. Based on the information given for Sonimad Sawmill, Inc., allocate the joint processing costs of $1,020,000 to each of the three product lines using the:
a. Relative sales-value-at-split-off method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Monthly Unit Output |
Sales Price per Unit |
Relative Sales
Value at Split-Off |
Percent of Sales |
Allocated Joint Costs |
||
| Studs | $ | $ | % | $ | ||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | $ | % | $ |
(Note: Difference due to rounding.)
b. Physical units method at split-off.
Units |
Percent |
x |
Joint Cost |
= |
Allocated Joint Costs |
|
| Studs | % | $ | $ | |||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | $ |
c. Estimated net realizable value method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.
| Fully Processed
Monthly Unit Output |
Sales Price per Unit |
Net Realizable Value |
Percent of Value |
Estimated
Allocated Joint Costs |
||
| Studs | $ | $ | % | $ | ||
| Decorative pieces | % | |||||
| Posts | % | |||||
| Total | $ | % | $ |
(Note: Difference due to rounding.)
2. Prepare an analysis for Sonimad Sawmill, Inc., to compare processing the decorative pieces further as it presently does, with selling the rough-cut product immediately at split-off.
| Sonimad Sawmill, Inc. | |
| Analysis Report | |
| Monthly unit output | |
| Final sales value | $ |
| Differential revenue | $ |
| Additional contribution from further processing | $ |
In: Accounting
Direct mail advertisers send solicitations ("junk mail") to thousands of potential customers in the hope that some will buy the company's product. The response rate is usually quite low. Suppose a company wants to test the response to a new flyer and sends it to 1160 people randomly selected from their mailing list of over 200,000 people. They get orders from 140 of the recipients. Use this information to complete parts a through d.
a) Create a 90% confidence interval for the percentage of people the company contacts who may buy something.
(___%, ___%)
(Round to one decimal place as needed.)
b) Explain what this interval means.
A. The values for the interval bounds should be subtracted from 90% to obtain the company's true confidence level.
B. The company is 90% confident that the percentage of people who will respond to the flyer falls within the confidence interval bounds.
C. The company is 90% confident that the probability a randomly sampled person will respond to the flyer falls within the confidence interval bounds.
D.The company is 90% confident that the percentage of people who will not respond to the flyer falls within the confidence interval bounds.
c) Explain what "90% confidence" means.
A. About 90% of all randomly sampled people will respond to the new flyer.
B. About 90% of all random samples will produce intervals that contain the true proportion of people who will respond to the new flyer.
C. About 90% of all random samples of size 1160 will produce intervals that contain the true proportion of people who will respond to the new flyer.
D. About 90% of all random samples of size 1160 will produce intervals that do not contain the true proportion of people who will respond to the new flyer.
d) The company must decide whether to do a mass mailing. The mailing won't be cost-effective unless it produces at least a 4% return. What does your confidence interval suggest?
A. Do the mass mailing.
B. Do not do the mass mailing.
In: Statistics and Probability
The University of Cincinnati Center for Business Analytics is an outreach center that collaborates with industry partners on applied research and continuing education in business analytics. One of the programs offered by the center is a quarterly Business Intelligence Symposium. Each symposium features three speakers on the real-world use of analytics. Each of the corporate members of the center (there are currently 10) receives twelve free seats to each symposium. Nonmembers wishing to attend must pay $75 per person. Each attendee receives breakfast, lunch, and free parking. The following are the costs incurred for putting on this event:
| Rental cost for the auditorium: | $150 | |
| Registration Processing: | $8.50 | per person |
| Speaker Costs: 3@$800 | $2,400 | |
| Continental Breakfast: | $4.00 | per person |
| Lunch: | $7.00 | per person |
| Parking: | $5.00 | per person |
| (a) | The Center for Business Analytics is considering a refund policy for no-shows. No refund would be given for members who do not attend, but for nonmembers who do not attend, 50% of the price will be refunded. Build a spreadsheet model in Excel that calculates a profit or loss based on the number of nonmember registrants. Extend the model you developed for the Business Intelligence Symposium to account for the fact that historically, 25% of members who registered do not show and 10% of registered nonmembers do not attend. The center pays the caterer for breakfast and lunch based on the number of registrants (not the number of attendees). However, the center only pays for parking for those who attend. What is the profit if each corporate member registers their full allotment of tickets and 127 nonmembers register? | ||||||
|
If required, round your answers to two decimal places.
|
In: Accounting
|
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): |
|
Sales |
$ |
25,700 |
|
Variable expenses |
13,900 |
|
|
Contribution margin |
11,800 |
|
|
Fixed expenses |
7,788 |
|
|
Net operating income |
$ |
4,012 |
|
Required: |
|
1. |
What is the contribution margin per unit? (Round your answer to 2 decimal places.) |
|
2. |
What is the contribution margin ratio? (Enter your answer as a percentage rounded to 2 decimal places (i.e., 0.13579 should be entered as 13.58).) |
|
3. |
What is the variable expense ratio? Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34). |
|
4. |
If sales increase to 1,001 units, what would be the increase in net operating income? (Round your answer to 2 decimal places.) |
|
5. |
If sales decline to 900 units, what would be the net operating income? (Do not round intermediate calculations.) |
|
6. |
If the selling price increases by $1.60 per unit and the sales volume decreases by 100 units, what would be the net operating income? (Do not round intermediate calculations.) |
|
7. |
If the variable cost per unit increases by $.60, spending on advertising increases by $1,100, and unit sales increase by 250 units, what would be the net operating income? (Do not round intermediate calculations.) |
|
8. |
What is the break-even point in unit sales? (Do not round intermediate calculations.) |
|
9. |
What is the break-even point in dollar sales? (Round intermediate calculations to 4 decimal places. Round your final answer to the nearest dollar amount.) |
|
10. |
How many units must be sold to achieve a target profit of $7,906? (Do not round intermediate calculations.) |
|
11-a. |
What is the margin of safety in dollars? (Do not round intermediate calculations.) |
|
11-b. |
What is the margin of safety percentage? (Round your final answers to the nearest whole percentage (i.e, .12 should be entered as 12).) |
|
12. |
What is the degree of operating leverage? (Round your answer to 2 decimal places.) |
|
13. |
Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 4% increase in sales? Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34). |
|
14. |
Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $7,788 and the total fixed expenses are $13,900. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage? (Round your answer to 2 decimal places.) |
|
15. |
Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $7,788 and the total fixed expenses are $13,900. Given this scenario, and assuming that total sales remain the same, calculate the degree of operating leverage. Using the calculated degree of operating leverage, what is the estimated percent increase in net operating income of a 4% increase in sales? Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34). |
In: Accounting
Cortez Company is planning to introduce a new product that will sell for $106 per unit. The following manufacturing cost estimates have been made on 20,000 units to be produced the first year:
| Direct materials | $ | 800,000 | |
| Direct labor | 480,000 | (= $16 per hour × 30,000 hours) | |
Manufacturing overhead costs have not yet been estimated for the new product, but monthly data on total production and overhead costs for the past 24 months have been analyzed using simple linear regression. The following results were derived from the simple regression and provide the basis for overhead cost estimates for the new product.
| Simple Regression Analysis Results | |||
| Dependent variable—Factory overhead costs | |||
| Independent variable—Direct labor-hours | |||
| Computed values | |||
| Intercept | $ | 130,000 | |
| Coefficient on independent variable | $ | 6.00 | |
| Coefficient of correlation | .926 | ||
| R2 | .857 | ||
Required:
a. What percentage of the variation in overhead costs is explained by the independent variable?
85.70%
94.30%
102.80%
77.10%
None of the above
b. What is the total overhead cost for an
estimated activity level of 70,000 direct labor-hours?
$550,000
$560,000
$540,000
$570,000
None of the above
c. How much is the variable manufacturing cost per unit, using the variable overhead estimated by the regression (assuming that direct materials and direct labor are variable costs)?
$73.00
$80.00
$88.00
$66.00
None of the above
d. What is the expected contribution margin per unit to be earned during the first year on 20,000 units of the new product? (Assume that all marketing and administrative costs are fixed.)
$33.00
$36.00
$40.00
$30.00
None of the above
e. What is the manufacturing cost equation implied
by these results?
Total cost = $480,000 + ($6.00 × Number of units)
Total cost = $130,000 + ($106.00 × Number of units)
Total cost = $130,000 + ($16.00 × Number of units)
None of the above
In: Accounting