A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $6.10 per unit to manufacture. The units can be a) sold as is for $3.40 each, or b) reworked for $4.50 each and then sold for the full price of $9.50 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them?
Q: Kim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units…
A: we have to calculate which option is benefit to company.
Q: NUBD Co. has 24,000 defective units of a product that cost P8 per unit to manufacture, and can be…
A: Given Defective Units = 24,000 Manufacturing Cost = P8 Sale price of defective units = P4 Rework…
Q: Chang Industries has 1,500 defective units of product that already cost $44 each to produce. A…
A: Period cost means which are not directly included in the process of production. General and…
Q: MSI is considering outsourcing the production of the handheld control module used with some of its…
A: Relevant cost of making per unit = Direct materials + Direct labor + Variable manufacturing overhead…
Q: What is the net advantage (disadvantage) of purchasing the part rather than making it? Ahringer…
A: Answer- P 20,000 Working Making Cost per unit Direct Material 19.10 Direct Labour…
Q: A company with excess capacity must decide between scrapping or reworking units that do not pass…
A: Lets understand the basics. When management have more than one alternative then management try to…
Q: NUBD Co. has 24,000 defective units of a product that cost P8 per unit to manufacture, and can be…
A: Number of defective units = 24,000 Cost to produce per unit = P8 cost of rework per unit = P2…
Q: A company with excess capacity must decide between scrapping or reworking units that do not pass…
A: Incremental income is the amount of extra money earned by putting an extra effort on products or…
Q: A company with excess capacity must decide between scrapping or reworking units that do not pass…
A: Incremental Analysis: Incremental analysis refers to the analysis of differential revenue that could…
Q: Garcia Company has 10,000 units of its product that were produced last year at a total cost of…
A: Relevant and Sunk Costs: Relevant costs are those costs in any managerial decision-making process…
Q: Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens…
A: Answer:
Q: Road Master Shocks has 15,000 units of a defective product on hand that cost $80,000 to manufacture.…
A: This question deals with the preparing schedule to show selling defective units as scrap or rework.…
Q: Garcia Company has 11,500 units of its product that were produced at a cost of $172,500. The units…
A: In decision-making questions of Scrap or Rework analysis, the decision will be made on the basis of…
Q: Trifecta Distributors has decided to discontinue manufacturing its X Plus model. Currently, the…
A: Differential revenue per unit = Sales after rework - sale as is = $160 per unit - $104 per unit =…
Q: Futura Company purchases the 64,000 starters that it installs in its standard line of farm tractors…
A: The decision which relates to whether buying a product or manufacturing it is called the make or buy…
Q: Pumpkin Company needs 20,000 units of a certain part to use in one of its products. The following…
A: Variable cost means the cost which vary with the level of output and fixed cost means the cost which…
Q: For many years Futura Company has purchased the starters that it installs in its standard line of…
A: Company decide to manufacturers: The company should make the starters means can save $0.50 per unit…
Q: Stone contractors has received a special one time order for 1,500 tube light at P15 per unit.…
A: Special order decision is the situation where the entity have to decide to continue with the current…
Q: Futura Company purchases the 70,000 starters that it installs in its standard line of farm tractors…
A: Solution:- Calculation of the financial advantage (disadvantage) of making the 71,000 starters…
Q: A company with excess capacity must decide between scrapping or reworking units that do not pass…
A: Prepare incremental income from selling the units as scrap and selling after reworking on units as…
Q: A company has an inventory of 1,000 assorted parts for a line of missiles that has been…
A: The inventory which has been discontinued Is a historic cost not relevant for the decision…
Q: Micron Manufacturing produces electronic equipment. This year, it produced 7,500 oscilloscopes at a…
A:
Q: Cee Incorporated has some raw materials (Banana) that originally costs 35,000. This raw material…
A: It has been asked in this question that if a company reduces the rework cost on the scrap value of…
Q: A company must decide between scrapping or reworking units that do not pass inspection. The company…
A: Working note:
Q: A company must decide between scrapping or reworking units that do not pass inspection. The company…
A: calculation of scarp or rework analysis are as follows
Q: Kim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units…
A: Alternative 1 - profit /loss if reworked and then sold :- Total Sales price =…
Q: Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the…
A: Particulars Amount Amount Outsourcing Cost ($2,000 * 1,000) $2,000,000 Less: Cost Savings…
Q: Andrea Company manufactures a part for its production cycle. The annual costs per unit for 20,000…
A: Answer a) Statement of Comparative Cost assuming that there is no alternative use for the facilities…
Q: Jackson Inc. disposes of other companies’ toxic waste. Currently, Jackson loads the waste by…
A: Given is: Cost of Machine = $200,000 Reduction in Labour Cost = $5 per load Loads in a year = 10000
Q: Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys…
A: Relevant Costs are the equal to the marginal cost of production, i.e. the additional expenditure…
Q: A company must decide between scrapping or reworking units that do not pass inspection. The company…
A: If some goods has been scraped and become defective , then company might have two options :- First…
Q: Boom has damaged materials of 2,000 units with cost of 200,000. If rework, additional cost is 20,000…
A: Cost of goods sold is the total of all direct Cost of producing the goods sold by a company like…
Q: Road master shocks has 15000 units of a defective product on hand that costs $80,000 to manufacture.…
A: In the given case there are two options where the company can either sell it as scrap or sell it…
Q: Concord, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of…
A: Given information, •Un-assembled product: Cost= $13 Selling price= $54 •Assembled product:…
Q: Ahngram Corp. has 1,000 defective units of a product that cost $2.20 per unit in direct costs and…
A: Incremental net income (loss) from reworking the units = (Additional revenue per unit - rework costs…
Q: NUBD Manufacturing is considering dropping a product line. It currently produces a multipurpose…
A: Contribution per unit=Sale price per unit-Variable cost per unit=P 10 - P 6=P 4
Q: Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $5 per…
A: Profit per unit = Sales Price - Variable Cost - Fixed Cost $ 5 - $ 3 - $…
Q: Zycon has produced 10,000 units of partially finished Product A. These units cost $15,000 to…
A: Relevant cost is of great importance to the management and are incurred when specific decisions are…
Q: Phillips HVAC and Plumbing has received a special one-time order for 1,500 faucets (units) at $5 per…
A: Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures…
Q: A company has an inventory of 1,300 assorted parts for a line of missiles that has been…
A:
Q: Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys…
A: Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…
Q: Zycon has produced 10,000 units of partially finished Product A. These units cost $15,000 to…
A: The future differential cost is relevant in decision making and affects the decisions of the…
Q: A company with excess capacity must decide between scrapping or reworking units that do not pass…
A: Introduction: The sales associated with an increased quantity sold are known as incremental revenue.…
Q: BCD Company has 7,000 obsolete toys carried in inventory at a manufacturing cost of Phó per unit. If…
A: Given that 7,000 toys are carried in inventory at a manufacturing cost of Ph6 per unit Total cost =…
Q: Tiny Dog Company has 15,000 units of its sparkle dog collar in inventory that had a production cost…
A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: MSI is considering outsourcing the production of the handheld control module used with some of its…
A: Lets understand the basics. When there is decision requires between the make a product or buy a…
Q: Kim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units…
A: To take decision regarding reworking on material or sell it as scrap, we need to check the…
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $6.10 per unit to manufacture. The units can be a) sold as is for $3.40 each, or b) reworked for $4.50 each and then sold for the full price of $9.50 each.
What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
- Morrill Company produces two different types of gauges: a density gauge and a thickness gauge. The segmented income statement for a typical quarter follows. Includes depreciation. The density gauge uses a subassembly that is purchased from an external supplier for 25 per unit. Each quarter, 2,000 subassemblies are purchased. All units produced are sold, and there are no ending inventories of subassemblies. Morrill is considering making the subassembly rather than buying it. Unit-level variable manufacturing costs are as follows: No significant non-unit-level costs are incurred. Morrill is considering two alternatives to supply the productive capacity for the subassembly. 1. Lease the needed space and equipment at a cost of 27,000 per quarter for the space and 10,000 per quarter for a supervisor. There are no other fixed expenses. 2. Drop the thickness gauge. The equipment could be adapted with virtually no cost and the existing space utilized to produce the subassembly. The direct fixed expenses, including supervision, would be 38,000, 8,000 of which is depreciation on equipment. If the thickness gauge is dropped, sales of the density gauge will not be affected. Required: 1. Should Morrill Company make or buy the subassembly? If it makes the subassembly, which alternative should be chosen? Explain and provide supporting computations. 2. Suppose that dropping the thickness gauge will decrease sales of the density gauge by 10 percent. What effect does this have on the decision? 3. Assume that dropping the thickness gauge decreases sales of the density gauge by 10 percent and that 2,800 subassemblies are required per quarter. As before, assume that there are no ending inventories of subassemblies and that all units produced are sold. Assume also that the per-unit sales price and variable costs are the same as in Requirement 1. Include the leasing alternative in your consideration. Now, what is the correct decision?A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that cost $6 per unit to manufacture. The units can be a) sold as is for $2.00 each, or b) reworked for $4.50 each and then sold for the full price of $8.50 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Sale as Scrap Rework Incremental income (loss) $ 2$ The company should:A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 10,000 defective units that cost $5.30 per unit to manufacture. The units can be a) sold as is for $3.10 each, or b) reworked for $4.60 each and then sold for the full price of $8.40 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Incremental income (loss) The company should: Sale as Scrap Rework
- A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 10,000 defective units that cost $5.30 per unit to manufacture. The units can be a) sold as is for $3.10 each, or b) reworked for $4.60 each and then sold for the full price of $8.40 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Incremental income (loss) The company should: Sale as Scrap $A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $5.70 per unit to manufacture. The units can be a) sold as is for $3.20 each, or b) reworked for $4.70 each and then sold for the full price of $8.90 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.)Road master shocks has 15000 units of a defective product on hand that costs $80,000 to manufacture. The company can either sell this product as is for scrap for $6 per unit or it can sell the product for $9 per unit after reworking the units to correct the defects at a cost of $50,000. What should the company do?
- Garcia Company has 10,500 units of its product that were produced at a cost of $157,500. The units were damaged in a rainstorm. Garcia can sell the units as scrap for $21,000, or it can rework the units at a cost of $39,500 and then sell them for $52,000. (a) Prepare a scrap or rework analysis of income effects. (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units Cost of reworked units Income $ 0 $ 0 Incremental income (b) The company should:Garcia Company has 10,400 units of its product that were produced at a cost of $156,000. The units were damaged in a rainstorm. Garcia can sell the units as scrap for $31,200, or it can rework the units at a cost of $49,600 and then sell them for $65,300. (a) Prepare a scrap or rework analysis of income effects. (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should: F1 2 W S F2 # 3 E D 80 F3 MAR 29 $ 4 Scrap (0) R a F4 % 5 Rework ON F7 DII 8 1 FB ( 9 F9 F G H J KA company must decide between scrapping or reworking units that do not pass inspection. The company has 22000 defective units that cost $6 per unit to manufacture. The units can be sold as is for $2.00 each or they can be reworked for $4.50 each and then sold for the full price of $8.50 each. If the units are sold as is the company will be able to build 22000 replacement units at a cost of $6 each and sell them at the full price of $8.50. (1) What is the incremental income from selling the units as scrap? (2) what is the incremental income from reworking and selling the units?(3) should the company sell the units as scrap or rework them?
- -S Garcia Company has 10,500 units of its product that were produced at a cost of $157,500. The units were damaged in a rainstorm. Garcia can sell the units as scrap for $21,000, or it can rework the units at a cost of $39,500 and then sell them for $52,000. (a) Prepare a scrap or rework analysis of income effects. (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should: Scrap ReworkA company must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $48,000 or reworked for $78,400 and then sold for $144,000. (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them? 4) Sempor Red Analysis Revenue from sorappedworked un Cast of reworked units Income incrementalne by The company should ReworkA company must decide between scrapping or reworking units that do not pass Inspection. The company has 10,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $31,000 or reworked for $45,000 and then sold for $85,000. (a) Prepare a scrap or rework analysis of Income effects. (b) Should the company sell the units as scrap or rework them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should: Scrap Rework