Answer:
Instructions are below.
Explanation:
Giving the following information:
Department A:
Direct labor cost= $60,000
Manufacturing overhead= $90,000
Department B:
Manufacturing overhead= $45,000
Machine-hours= 2,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Department A:
Predetermined manufacturing overhead rate= 90,000/60,000
Predetermined manufacturing overhead rate= $1.5 per direct labor dollar
Department B:
Predetermined manufacturing overhead rate= 45,000/2,000= $22.4 per machine-hour
Answer:
True
Explanation: If you have overdraft protection your account
Answer:
$2,034,500 ; A
Explanation:
In this question, we are asked to calculate cost estimate.
One of the methods which we can use to do this is the cost factor technique.
Mathematically, the estimated total cost will be;
Ct = hCe
Where Ce refers to cost at major equipment and h is the overall cost factor.
From the question, we can identify the following;
Ce is $650,000 while h = 1.82 + 1 + 0.31 = 3.13
Inputing these values in the formula, we have;
Ct = $650,000 * 3.13 = $2,034,500
Answer:
a) 2, 034,500
Explanation:
the explanation is given in the file attached
Variable expenses 750,000
Contribution margin 500,000
Fixed expenses 320,000
Net operating income $ 180,000
Required:
1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level.
2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls?
3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $202,000, as last year?
4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs?
5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?
6. Refer to the data in (5) above.
a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $202,000, as last year?
b. Assume the new plant is built and that next year the company manufactures and sells 37,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.
Answer:
Please find attached solutions
Explanation:
a. Last year contribution margin ratio
= Contribution margin / Sales
= $500,000 / $1,250,000
= 40%
ai Break even point in balls
But Contribution margin per unit
= $25 - $15
= $10 per unit.
Therefore ,
Break even point in balls
= Fixed cost / Contribution margin per unit
= $320,000 / $10
= 32,000 balls.
b. The degree of operating leverage at last year' s sales level
= Contribution margin / Net operating income
= $500,000 / $180,000
= 2.78
Please other solutions are as attached.
The manufacturing company must calculate and consider several factors when deciding on changes to labor costs and manufacturing processes, including the Contribution Margin (CM) ratio, break-even point, degrees of operating leverage, and the potential impact of a new automated plant.
The Northwood Company, which manufactures basketballs, has to make several business decisions based on manufacturing costs, sales, and net operating income. Many essential factors have to be calculated, such as the Contribution Margin (CM) ratio, the break-even point, the degree of operating leverage, and potential changes due to increased labor rates and a different manufacturing plant.
1. (a) Last year's CM ratio was 40% (500,000 / 1,250,000). The break-even point in balls is 32,000 balls (320,000 / 25 ×0.40). (b) The degree of operating leverage at last year’s sales level is 2.78 (500,000 / 180,000).
2. If variable expenses increase by $3.00 per ball, next year's CM ratio will be 28% ((25-18) / 25). The break-even point in balls is 45,714 balls (320,000 / (25×0.28)).
3. If the expected change in variable expenses takes place, 56,667 balls will have to be sold next year to earn the same net operating income, $202,000 ((320,000 + 202,000) / (25×0.28)).
4. To maintain the same CM ratio, the selling price per ball must be $30.00 next year ((15+3)/0.4).
5. If a new automated manufacturing plant is built, the new CM ratio would be 64% ((15×0.6) / 25) and the new break-even point in balls is 50,000 balls ((320,000×2) / (25×0.64)).
6. (a) If the new plant is built, 56,333 balls will have to be sold next year to earn the same net operating income, $202,000 ((320,000×2 + 202,000) / (25×0.64)). (b) If 37,000 balls are sold, the company's contribution format income statement would show sales of $925,000, variable expenses of $333,000, fixed expenses of $640,000, and a net operating loss of $48,000. The degree of operating leverage is negative in this case because of the loss.
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Answer:
The company must sell 34706 units
Explanation:
To calculate the units required to earn a target profit of $1000000 next year, we will use the break even analysis modified for target profit calculation.
The break even in units is calculated by dividing the Total fixed costs by the contribution margin per unit. To calculate the units required for target profit, we add the target profit amount to the fixed cost and divide it by the contribution margin per unit. Thus, the formula is,
Units required for target profit = (Total fixed cost + target profit) / Contribution margin per unit
Where contribution margin per unit = Selling price per unit - Variable cost per unit
New fixed costs = 700000 + 700000 * 0.1 = 770000
New variable cost = 45 - 3 = 42
New contribution margin per unit = 93 - 42 = $51
Units required for target profit = (770000 + 1000000) / 51
Units required for target profit = 34705.88 rounded off to 34706 units
Answer:
The incremental costs of making and buying component RX5 is $100,000
Explanation:
For computing the increment cost of making and buying component RX5, first we have to compute the cost of making and buying component RX5 separately.
Cost of making includes:
Direct Material = 50,000 × $5 = $250,000
Direct Labor = 50,000 × 9 = $450,000
Variable Overhead cost = 50,000 × 10 × 30% = $150,000
So, total cost of making = Direct material cost + direct labor cost + variable overhead cost
= $250,000 + $450,000 + $150,000
= $850,000
Now, the cost of buying component is equals to
= units × RX5 per unit
= 50,000 × $19
= $950,000
So, the incremental costs of making and buying component RX5 is equals to
= cost of making - cost of buying component
= $950,000 - $850,000
= $100,000
Hence, the incremental costs of making and buying component RX5 is $100,000
The incremental cost of making component RX5 is $5.00 per unit.
To calculate the incremental costs of making and buying component RX5, we need to compare the cost of making the component in-house versus buying it from an outside supplier. The incremental cost of making the component is the difference between the current cost per unit to manufacture and the cost offered by the supplier. Here's how to calculate it:
The incremental cost of making component RX5 is $5.00 per unit.
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II The corporation's capitalization will decrease
III The market value of the common stock will increase
IV The market value of the common stock will decrease
Answer:
II and III
Explanation:
The best answer is ii and iii. If a corporation repurchases its debt, then its capitalization will decrease. Corporations repurchase debt to refinance at smaller interest rates so as to To increase the market value of the corporation's common stock. If corporation has less debt, the common stock would have more value and to reduce the corporation's earnings fluctuation's due to cyclical conditions. Corporate sales fall because of cyclical conditions, but fixed interest charges do not. This causes earnings for common shareholders to reduce in period of falling sales. To reduce this possibility, a corporation can repurchase its debt.