ONE At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: Direct material Direct labor Variable overhead Fixed overhead (primarily depreciation of equipment) Total Required: $5.50 3.10 2.45 4.80 $15.85 1. What is the annual financial impact of hiring the extra worker for the bottleneck process? Show your calculations, and explain as needed. 2. What additional factors should Stardust consider before making the decision to hire the extra worker?

ONE At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: Direct material Direct labor Variable overhead Fixed overhead (primarily depreciation of equipment) Total Required: $5.50 3.10 2.45 4.80 $15.85 1. What is the annual financial impact of hiring the extra worker for the bottleneck process? Show your calculations, and explain as needed. 2. What additional factors should Stardust consider before making the decision to hire the extra worker?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 16PB: At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The...

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At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: What is the annual financial impact of hiring the extra worker for the bottleneck process?
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Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $54,000 per year, to solve the problem. With this extra worker, the company could produce and sell 2,900 more units per year. Currently, the selling price per unit is $25.00 and the cost per unit is $7.50. Direct materials $3.40 Direct labor Variable overhead Fixed overhead (primarily depreciation of equipment) Total 1.00 0.40 2.70 $7.50 Using the Information provided, calculate the annual financial Impact of hiring the extra worker. Profit $ ✓ Increase
Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $55,000 per year, to solve the problem. With this extra worker, the company could produce and sell 2,900 more units per year. Currently, the selling price per unit is $26.00 and the cost per unit is $7.60. Direct materials $3.40 Direct labor 1.10 Variable overhead 0.40 Fixed overhead (primarily depreciation of equipment) 2.70 Total $7.60 Using the information provided, calculate the annual financial impact of hiring the extra worker. What is the profit?
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