Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to four tons of trash in a load. The la operation requires certain preparation activities regardless of the amount of trash in a truck (i.e., for each load). The budget for andfill for next year follows. volume of trash Preparation costs (varies by loads) other variable costs (varies by tons) Fixed costs 1, 200 tons (300 loads) $ 54,000 54,000 178,000 Total budgeted costs $286, 000 Mathes is considering making the landfill a profit center and charging the manufacturing plants for disposal of the trash. The land sufficient capacity to operate for at least the next 20 vears, Other landfills are available in the area (both private and muunicipal)

Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to four tons of trash in a load. The la operation requires certain preparation activities regardless of the amount of trash in a truck (i.e., for each load). The budget for andfill for next year follows. volume of trash Preparation costs (varies by loads) other variable costs (varies by tons) Fixed costs 1, 200 tons (300 loads) $ 54,000 54,000 178,000 Total budgeted costs $286, 000 Mathes is considering making the landfill a profit center and charging the manufacturing plants for disposal of the trash. The land sufficient capacity to operate for at least the next 20 vears, Other landfills are available in the area (both private and muunicipal)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 31P: Haysbert Company provides management services for apartments and rental units. In general, Haysbert...

See similar textbooks

Similar questions

Radom Manufacturing produces various products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to five tons of trash in a load. The landfill operation requires certain preparation activities regardless of the amount of trash in a truck (i.e., for each load). The budget for the landfill for next year follows: Volume of trash 2,450 tons (490 loads) Preparation costs (varies by loads) $ 166,600 Other variable costs (varies by tons) 166,600 Fixed costs 245,000 Total budgeted costs $ 578,200 Radom plans to make the landfill a profit center and charge the manufacturing plants for disposal of the trash. The landfill has sufficient capacity to operate for at least the next 20 years. Other landfills are available in the area (both private and municipal), and both Radom manufacturing plants would be free to decide which landfill to use. Required: Compute…
Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to seven tons of trash in a load. The landfill operation requires certain preparation activities regardless of the amount of trash in a truck (i.e., for each load). The budget for the landfill for next year follows. Volume of trash 1,000 tons (250 loads) Preparation costs (varies by loads) $ 60,000 Other variable costs (varies by tons) 60,000 Fixed costs 158,000 Total budgeted costs $ 278,000 Mathes is considering making the landfill a profit center and charging the manufacturing plants for disposal of the trash. The landfill has sufficient capacity to operate for at least the next 20 years. Other landfills are available in the area (both private and municipal), and each plant would be free to decide which landfill to use. Required: a.…
Haysbert Company provides management services for apartments and rental units. In general, Haysbert packages its services into two groups: basic and complete. The basic package includes advertising vacant units, showing potential renters through them, and collecting monthly rent and remitting it to the owner. The complete package adds maintenance of units and bookkeeping to the basic package. Packages are priced on a per-rental unit basis. Actual results from last year are as follows: Haysbert had budgeted the following amounts: Required: 1. Calculate the contribution margin variance. 2. Calculate the contribution margin volume variance. 3. Calculate the sales mix variance.
The F Inc.’s materials manager is considering the installation of a just-in-time (JIT) inventory system for L-20, one of the chemicals used in the production process. Currently, the chemical is purchased for $30 each pound. The firm uses 4,800 pounds L-20 per year. The controller estimates that it costs $150 to place and receive a typical order of L-20. The annual cost of storing L-20 is $1 per pound. F Inc.’s manufacturing engineering team identifies the following effects of adopting a JIT inventory system: 1) F Inc. will order 100 pounds L-20 each time. 2) The cost of placing an order for L-20 will be reduced to $20. 3) Suppliers would add $4 to the price per pound for frequent deliveries. 4) Currently there is a defect-assessment cost of $120,000 per year. This cost is expected a reduction of 20% under the JIT system. F Inc. requires a 10% annual rate of return on investment Required: From a financial perspective, determine whether it is in the best interest of F to…
Alpine Township contracts with Dragoon Environmental Services (DES) to provide solid waste collection to households and businesses. Until recently, DES had an exclusive franchise to provide this service in Alpine, which meant that other waste collection firms could not operate legally in the township. The price per pound of waste collected was regulated at 24 percent above the average total cost of collection.. Cost data for the most recent year of operations for DES are as follows: Administrative cost Operating costs-trucks Other collection costs $ 480,000 1,536,000 384,000 Data on customers for the most recent year are as follows: Households Businesses 11,520 2,880 4,000 12,000 Number of customers Waste collected (tons) The Township Board of Alpine is considering allowing other private waste haulers to collect waste from businesses but not from households. Service to businesses from other waste collection firms would not be subject to price regulation. Based on information from…
W. W. Grainger, Inc., is a leading supplier of maintenance, repair, and operating (MRO) products to businesses and institutions in the United States, Canada, and Mexico, with an expanding presence in Japan, India, China, and Panama. The company works with more than 5,000 suppliers where Grainger offers nearly 1.5 million products. The products range from industrial adhesives used in manufacturing, to hand tools, janitorial supplies, lighting equipment, and power tools. When something is needed by one of its customers, it is often needed quickly, so quick service and product availability are key drivers to Grainger's success. Grainger works with over 250 suppliers in the China and Taiwan region. These suppliers produce products to Grainger's specifications and ship to the United States using ocean freight carriers from four major ports in China and Taiwan. From these ports, product is shipped to U.S. entry ports in either Seattle, Washington, or Los Angeles, California. After passing…
A waste-holding lagoon situated near the main plant of a chemical company receives sludge on a daily basis. When the lagoon is full, it is necessary to remove the sludge to a site located 4.95 kilometers from the main plant. Currently, when the la-goon is full, the sludge is removed by pumping it into a tank truck and hauling it away. This process requires the use of a portable pump that has an initial cost of $800 and an 8-year life. The company can operate the pump at a cost of $25 per day, but the truck and driver cost $110 per day. Alternatively, the company has a proposal to install a pump and pipeline to the remote site. The pump would have an initial cost of $600, a life of 10 years, and a cost of $3 per day to operate. (a) If the MARR is 15% per year and the pipeline will cost $3.52 per meter to construct, how many days per year must the lagoon require pumping to justify construction of the pipeline? (b) The lagoon was pumped 40 times last year. Which alternative would have…
A chemical company is considering two types of incinerators to burn solid waste generated by a chemical operation. Both incinerators have a burning capacity of 20 tons per day. The following data have been compiled for comparison of the two incinerators: If the firm's MARR is known to be 13%. determine the processing cost per tonof solid waste for each incinerator. Assume that incinerator B will be availablein the future at the same cost.
Jackson Inc. disposes of other companies’ toxic waste. Currently, Jackson loads the waste by handinto a truck, which requires labor of $20 per load. Jackson is considering a machine that wouldreduce the amount of time needed to load the waste. The machine would cost $200,000 but wouldreduce labor cost to $5 per load. Assume that Jackson averages 10,000 loads per year. How manyyears (rounded to 2 decimal places) would it take for Jackson to recover the cost of the new machine?
Triton Company's copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of copies: Salaries (fixed) $92,500 Employee benefits (fixed) 10,000 Depreciation of copy machines (fixed) 10,000 Utilities (fixed) 5,000 Paper (variable, 1 cent per copy) 50,000 Toner (variable, 1 cent per copy) 50,000 The costs are assigned to two cost pools, one for fixed and one for variable costs. The costs are then assigned to the sales department and the administrative department. Fixed costs are assigned on a lump-sum basis, 40 percent to sales and 60 percent to administration. The variable costs are assigned at a rate of 2 cents per copy. Assuming the following copies were made during the year, 2,759,750 for sales and 2,490,250 for administration, calculate the copy department costs allocated to sales.
Filtration, Inc. manufactures filters for use in secondary water irrigation systems. The costs per unit, for 20,000 filters, are as follows. Direct materials $8.00 Direct labor 9.00 Variable overhead 1.00 Fixed overhead 2.00 Total costs $20.00 Irrigation Products has offered to sell 20,000 filters to Filtration for $20 per filter. If Filtration accepts Irrigation Products’ offer, the facilities used to manufacture filters could be used to produce refrigerator filtration units. Revenues from the sale of refrigerator filtration units are estimated at $57,000, with variable costs amounting to 50% of sales. In addition, $1 per unit of the fixed overhead associated with the manufacture of secondary water irrigation filters could be eliminated. Compute the following: Cost to make filters Answer Cost to buy filters Answer Should Filtration, Inc. accept Irrigation Product’s offer? Yes, the cost to purchase the filters is less than the cost to make them.…
Advent Corporation started to produce automated garbage bins. The company uses a standard cost system and determines that it should take two hours of direct labour to produce one garbage bin. The normal production capacity for the company's bins is 62,500 units per year. The total budgeted overhead at normal capacity is $450,000 comprised of $200,000 of variable costs and $250,000 of fixed costs. Advent Corporation applies overhead on the basis of direct labour hours. During the current year, Advent Corporation produced 95,000 bins, worked 99,000 direct labour hours, and incurred variable overhead costs of $265,000 and fixed overhead costs of $326,200. Required: a. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. b. Compute the applied overhead for Advent for the year. c. Compute the total overhead variance.