Your bike helmet company is expecting demand for an additional 4,000 helmets in the upcoming year. While you have the capacity to handle the additional demand, a potential supplier has offered to make the 4,000 helmets for $9 per helmet. Other information from the financial accounting system is listed below. Should you make or buy the helmets? Commuter bike helmet Direct material Direct labor Manufacturing overhead: variable Non-manufacturing overhead: variable Total variable cost $6.54 $1.89 $1.07 $0.86 $10.36
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- Classifying Costs as Product or Period Costs Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan. Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank. 1. Depreciation on salespersons’ cars. 2. Rent on equipment used in the factory. 3. Lubricants used for machine maintenance. 4. Salaries of personnel who work in the finished goods warehouse. 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors’ salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) 9.…You have been approached by potential client who could bring you considerable business. She says, I would like to find an alternative vendor for future orders of 5,000 /y., but their pricing must be competitive. Your CFO has supplied you with the following information. Current product standards costs are as follows. . Selling price per unit . $5,000 . $1,400/ unit direct material . $400/ unit variable labor . $200/ unit variable overhead . $200/ unit fixed overhead (this figure is the results of the budgted fixed overhead $2,000,000 and budgeted sales volume of 10,000 units . Income tax rate =40% The board of directors has requested a though presentation to determine whether taking on this potential customer si good idea. Assume that your factor ia fully operational and that you will not have any learning curve impacts. In your presentation, answer the following question from the board using the data from the CFO. 1. What is meant by cost variance? 2. What is an effective way to…Prepare a contribution margin income statement for Head-First Company for the coming year. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Head-First Company Contribution Margin Income Statement For the Coming Year 1 Total Per Unit 2 3 ✔ 4 5 6 Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet $ 30 Direct labor per helmet 8 Variable factory overhead per helmet 4 Total fixed factory overhead 20,000 Variable selling expense is a commission of $3 per helmet; fixed selling and administrative expense totals $29,500. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin income statement for Head-First Company for…
- Refer to the list below for the exact wording of an amount description within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed cost Total variable cost Calculate the total variable cost per unit. Variable cost per unit Calculate the total fixed expense for the year. Total fixed expense for the year Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet $ 30 Direct labor per helmet 8 Variable factory overhead per helmet 4 Total fixed factory overhead 20,000 Variable selling expense is a commission of $3 per helmet; fixed selling and administrative expense totals $29,500. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin income statement for Head-First Company for the…Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 40,000 ceiling fans and 70,000 table fans in the coming year. Product price and cost information includes: Ceiling Fan Table Fan Price $56 $17 Unit variable cost $13 $8 Direct fixed cost $21,200 $43,000 Common fixed selling and administrative expenses total $98,000. Required: Question Content Area 1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)?Sales mix of ceiling fans to table fans = ___________ : ______________ 2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Round your intermediate calculations and final answers to the nearest whole number. Break-even ceiling fans _______ Break-even table fans ______ 3. Prepare a contribution-margin-based income…Lazer Tag manufactures computer parts within a relevant range of 50,000 to 100,000 units per year. Complete the following manufacturing cost schedule (a through j) for Lazer Tag. Fill in the following chart. Parts Produced 50,000 100,000 TOTAL COSTS: Variable $75,000 ? Fixed 50,000 ? Total ? ? COSTS PER UNIT: Variable ? ? Fixed ? ? Total ? ?
- Outdoor Luggage, Incorporated, makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular models appear below. Selling price per unit. Variable cost per unit Plastic injection molding machine processing time required to produce one unit Pounds of plastic pellets per unit Required 1 Complete this question by entering your answers in the tabs below. Required 2 Required: 1. If we assume that the total time available on the plastic injection molding machine is the constraint in the production process, how much contribution margin per minute of the constrained resource is earned by each product? 2. Which product offers the most profitable use of the plastic injection molding machine? Required 1 3. If we assume that a severe shortage of plastic pellets has required the company to cut back its production so much that its new constraint has become the total available pounds of plastic pellets, how much contribution margin per pound of the…Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Bolton Air. Jolly's fixed costs are $25,500 per month. Bolton Air charges passengers $1,300 per round-trip ticket. Read the requirement LOADING... . Begin by selecting the formula to calculate the breakeven points. Breakeven number of units = Fixed costs ÷ Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs + Target operating income ) ÷ Contribution margin per unit Now complete the requirement for each of the cases. Begin with case 1. Case 1: Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and…FlashCo. Manufactures 1 GB flash drives (jump drives). Price and cost data for a relevant range extending to 200,000 units per month are as follows: (Click the icon to view the data.) Requirements Ignore requirements 2, 3, 9 & 10 Requirement 1. What is the company's contribution margin per unit? The contribution margin per unit is $3. What is the company's contribution margin ratio? The contribution margin ratio is 15%. What is the company's total contribution margin? The total contribution margin is $. Requirement 4. What is the breakeven point in units? The company's breakeven point is units. What is the breakeven point in sales dollars? The breakeven point in dollars is $ Requirement 5. How many units would the company have to sell to earn a target monthly profit of $260,100? In order to earn a monthly profit of $260,100, the company must sell units. C Requirement 7. Return to the original data for this question and the rest of the questions. What is the company's current operating…
- Easy Access Medical Supplies makes semi-motorized walking sticks. They have decided to investigate whether they should continue to make or buy the walking sticks from a supplier. Currently, the cost of producing 10,000 semi-motorized walking sticks is as follows: Cost description Per Unit $ Direct Material 15 Direct Labor 10 Variable Factory Overhead 8 Fixed Factory Overhead 15 $48 The same component can be purchased from an outside supplier for $38 per unit. If the company purchases the semi-motorized walking sticks, 20% of the fixed costs will be eliminated. Required: a) Using incremental analysis, determine if the component should be purchased from the outside supplier? b) Would your decision in part a) change if the company has the opportunity to rent out its facilities that it currently uses to manufacture the component for $5,500 ? Show full computations. c) Why “Opportunity Costs” are not recorded…Easy Access Medical Supplies makes semi-motorized walking sticks. They have decided to investigate whether they should continue to make or buy the walking sticks from a supplier. Currently, the cost of producing 10,000 semi-motorized walking sticks is as follows: Cost description Per Unit $ Direct Material 15 Direct Labor 10 Variable Factory Overhead 8 Fixed Factory Overhead 15 $48 The same component can be purchased from an outside supplier for $38 per unit. If the company purchases the semi-motorized walking sticks, 20% of the fixed costs will be eliminated. Required: Using incremental analysis, determine if the component should be purchased from the outside supplier? Would your decision in part a) change if the company has the opportunity to rent out its facilities that it currently uses to manufacture the component for $5,500 ? Show full computations. Why “Opportunity Costs” are not recorded in the financial books but…A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows: MachineCost 40000 30000 80000 Product forecasts and processing times on the machines are as follows Processing Time Annual Per unit (minutes) Product Denmand 16000 A B. 3 2 12000 4 3. 6000 5. 4 4. 30000 2 Assume that only purchasing costs are being considered. Machines operate 10 hours a day, 250 days a year. How much is the Total Processing time needed using machine A? Select one: O a. 122,000 minutes Ob. 208,000 minutes 80.000 hours Od. 186.000 minutes 44 02 ABC
