Question details

A customer has requested that Gamba Corporation fill a special order for 2,700 units of product Q41
$ 10.00

 

A customer has requested that Gamba Corporation fill a special order for 2,700 units of product Q41 for $32 a unit. While the product would be modified slightly for the special order, product Q41 normal unit product cost is $22.00:
 

 

Direct materials

$ 6.30

Direct labor

4.00

Variable manufacturing overhead

3.40

Fixed manufacturing overhead

8.30

Unit product cost

$22.00


 

Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product Q41 that would increase the variable costs by $1.90 per unit and that would require an investment of $17,000 in special molds that would have no salvage value.
 

This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by:

$(16,700).

$27,280.

$(2,500).

$17,200.

 

Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows:
 

 

 

Direct materials

$58.1

Direct labor

$16.1

Variable manufacturing overhead

$1.3

Fixed manufacturing overhead

$25.6

Variable selling & administrative expense

$1.7

Fixed selling & administrative expense

$17.3



The normal selling price of the product is $125.8 per unit.
An order has been received from an overseas customer for 1,350 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.1 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $118.3 per unit. By how much would this special order increase (decrease) the company's net operating income for the month?

$(16,030)

$56,970

$(8,030)

$22,370


Consider the following production and cost data for two products, Q and P:
 

 

Product Q

Product P

Contribution margin per unit

$30

$24

Machine minutes needed per unit

3 minutes

2 minutes



 

A total of 14,600 machine minutes are available each period, and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?

$165,400

$189,800

$175,200

$160,600

 

Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows:
 

 

 

 

Direct materials

$

45.0

Direct labor

$

11.0

Variable manufacturing overhead

$

2.4

Fixed manufacturing overhead

$

21.9

Variable selling & administrative expense

$

2.9

Fixed selling & administrative expense

$

8.6


 


The normal selling price of the product is $98.6 per unit.
An order has been received from an overseas customer for 1,900 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $2.3 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.

What is the contribution margin per unit on normal sales?

$9.00

$11.30

$37.30

$13.70

 

 

The constraint at Bonavita Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:
 

 

UN

 

ZG

 

PW

Selling price per unit

$

247.00

 

 

$

352.80

 

 

$

168.40

 

Variable cost per unit

$

184.00

 

 

$

267.88

 

 

$

125.44

 

Minutes on the constraint

 

5.10

 

 

 

6.90

 

 

 

3.90

 


 

 

Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of this constrained resource? (Round your intermediate calculations and final answer to 2 decimal places.)

$12.35 cost per unit

$11.02 cost per unit

$42.96 cost per unit

$84.92 cost per unit

 

 

The constraint at Bonavita Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:
 

 

 

 

UN

 

ZG

 

PW

Selling price per unit

$

262.78

 

 

$

498.95

 

 

$

467.10

 

Variable cost per unit

$

187.30

 

 

$

374.39

 

 

$

339.91

 

Minutes on the constraint

 

3.70

 

 

 

7.20

 

 

 

7.90

 


 

 


Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized.

PW,UN,ZG

UN,ZG,PW

ZG,PW,UN

UN,PW,ZG

 

 


Yehle Inc. regularly uses material Y51B and currently has in stock 451 liters of the material for which it paid $2,613 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $5.15 per liter. New stocks of the material can be purchased on the open market for $5.75 per liter, but it must be purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of 500 liters of the material to be used in a job for a customer. The relevant cost of the 500 liters of material Y51B is:

$5,750

$2,575

$2,608

$2,875

 

Tawstir Corporation has 790 obsolete personal computers that are carried in inventory at a total cost of $1,135,230. If these computers are upgraded at a total cost of $55,300, they can be sold for a total of $926,670. As an alternative, the computers can be sold in their present condition for $847,275.
 

The sunk cost in this situation is:

$1,135,230

$926,670

$847,275

$55,300

 


For July, White Corporation has budgeted production of 7,100 units. Each unit requires 0.40 direct labor-hours at a cost of $6.30 per direct labor-hour. How much will White Corporation budget for labor in July?

$17,892

$19,028

$2,840

$44,730

May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of the year:
 

 

 

July

$89,400

August

$108,000

September

$73,000


 


Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending inventory equal to 135% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $81,883. The company is now preparing a Merchandise Purchases Budget.

The budgeted purchases for July are:

$67,157

$62,580

$82,757

$110,757

 

The manufacturing overhead budget at Pendley Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 8,250 direct labor-hours will be required in August. The variable overhead rate is $4.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $150,150 per month, which includes depreciation of $28,875. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:

$19.20

$18.20

$4.50

$22.70

 

Adi Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:

 

 

 

September

$954,000

October

$946,000

November

$892,000

December

$844,000



At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase.

In Adi's budgeted balance sheet at December 31, at what amount will accounts payable for raw materials be shown?

$844,000

$253,200

$624,400

$590,800

 

Category: Education, General
Available solutions
  • A customer has requested that Gamba Corporation fill a special order for 2,700 units of product Q41
    $10.00

    A customer has requested that Gamba Corporation fill a special order for 2,700 units of product Q41 for $32 a unit. While the product would be modified slightly for the special order, product Q41 normal unit product cost is $22.00: Direct materials $ 6.30 Direct labor 4.00 Variable manufacturing overhead 3.40 Fixed manufacturing overhead 8.30 Unit product cost $22.00 Dire

    Submitted on: 09 Dec, 2016 07:40:44 This tutorial has not been purchased yet .