Moisha is developing material standards for her company. The operations manager wants grade A widgets because they are the easiest to work with and are the quality the customers want. Grade B will not work because customers do not want the lower grade, and it takes more time to assemble the product than with grade A materials. Moisha calls several suppliers to get prices for the widget. All are within $0.05 of each other. Since they will use millions of widgets, she decides that the $0.05 difference is important. The supplier who has the lowest price is known for delivering late and low-quality materials. Moisha decides to use the supplier who is $0.02 more but delivers on time and at the right quality. This supplier charges $0.48 per widget. Each unit of product requires four widgets. What is the
Trending nowThis is a popular solution!
Chapter 8 Solutions
Principles of Accounting Volume 2
Additional Business Textbook Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Principles of Accounting Volume 1
Horngren's Accounting (11th Edition)
Construction Accounting And Financial Management (4th Edition)
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Managerial Accounting (4th Edition)
- Bristol is developing material standards for her company. The operations manager wants grade A plastic tops because they are the easiest to work with and are the quality the customers want. Grade B will not work because customers do not want the lower grade, and it takes more time to assemble the product than with grade A materials. Bristol calls several suppliers to get prices for the plastic top. All are within $0.10 of each other. Since the company will use millions of the plastic tops, she decides that the $0.10 difference is important. The supplier who has the lowest price is known for delivering late and low- quality materials. Bristol decides to use the supplier who is $0.04 more but delivers on time and at the right quality. This supplier charges $0.52 per plastic top. Each unit of product requires six plastic tops. What is the standard cost per unit for plastic tops?arrow_forwardMoisha is developing material standards for her company. The operations manager wants grade A widgets because they are the easiest to work with and are the quality the customers want. Grade B will not work because customers do not want the lower grade, and it takes more time to assemble the product than with grade A materials. Moisha calls several suppliers to get prices for the widget. All are within $0.05 of each other. Since they will use millions of widgets, she decides that the $0.05 difference is important. The supplier who has the lowest price is known for delivering late and low-quality materials. Moisha decides to use the supplier who is $0.02 more but delivers on time and at the right quality. This supplier charges $0.57 per widget. Each unit of product requires 4 widgets. What is the standard cost per unit for widgets? Round your answer to two decimal places.arrow_forwardDanielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielle’s first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is very intent on purchasing the warehouse because be believes that more storage space is needed. Jerrod asks Danielle into his office and the following conversation takes place: Jerrod: Danielle, you’re new here, aren’t you? Danielle: Yes, I am. Jerrod: Well, Danielle, I’m not at all pleased with capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I don’t get it, where am I going to place out output? Danielle: Well, we need to get product into our customer’s hands. Jerrod: I agree, and we need a warehouse to do that. Danielle: My analysis does not support constructing a new warehouse. The numbers don’t lie; the warehouse does not…arrow_forward
- Danielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielle's first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is intent on purchasing the warehouse because he believes that more storage space is needed. Jerrod asks Danielle to come to his office, where the following conversation takes place: Jerrod: Danielle, you're new here, aren't you? Danielle: Yes, I am. Jerrod: Well, Danielle, I'm not at all pleased with the capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I don't get it, where am I going to place our output? Danielle: Well, we need to get product into our customers' hands. Jerrod: I agree, and we need a warehouse to do that. Danielle: My analysis does not support constructing a new warehouse. The numbers…arrow_forwardPamela is opening a pastry shop in which she will make and sell special birthday cupcakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs, if she purchases one, two, or three mixers, are shown in the table. Assume that average variable costs do not vary with output. Suppose that Pamela is producing 100 cupcakes with one mixer, but she has a sudden increase in demand, so she begins to produce 200 cupcakes. Explain how her average total cost will change in the short run and in the long run. (Hint: Don't write more than 3 sentences) Table: Cupcakes at Dessert Delight Number of Fixed Costs Average mixers variable cost 1 $1,000 $10 1,500 2,500 2 3arrow_forwardNovak manufactures pre-made scrapbook pages for scrapbookers who don't have time to create their own pages. The clients need only insert their pictures on the pages. It currently sells a child's scrapbook with pre-made pages for $52. Production costs are $22 variable and $10 fixed. The company is considering creating scrapbook kits instead to save labour costs. They are expecting to sell these kits for $44 each and save $9 in variable costs. Prepare an incremental analysis. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -45,000 or parenthesis, e.g. (45,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) $ Kits $ $ Pre-made pages Should the company begin to sell kits or continue to sell pre-made scrapbooks? $ $ Incremental (revenue) and costsarrow_forward
- Santana Rey has found that Business Solutions’s line of computer desks and chairs has become popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Santana has determined that she only has 1,015 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.arrow_forwardWood Creations designs, manufactures, and sells modern wood sculptures. Sally Jensen is an artist for the company. Jensen has spent much of the past month working on the design of an intricate abstract piece. Jim Smoot, product development manager, likes the design. However, he wants to make sure that the sculpture can be priced competitively. Alexis Nampa, Wood's cost accountant, presents Smoot with the following cost data for the expected production of 75 sculptures: $ 8,000 30,000 37,000 33,000 25,000 15,000 Design cost Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Marketing Required: 1. Smoot thinks that Wood Creations can successfully market each piece for $2,400. The company's target operating income is 20% of revenue. a.) Wood Creations has a total capital investment of $240,000. Compute the target percentage of return on investment. b.) Calculate the markup percentage on full cost based on the current cost data. c.)…arrow_forwardDavid would like to order special holiday ornaments for his staff of 720 employees. He just found the perfect item clear glass globes with a unique design and material inside. The only issue is that the globes come from a small manufacturer with limited capacity. The manufacturer told David that it could only produce 360 of these ornaments for him without affecting its regular sales. Normally, these ornaments sell for $25.00 each and cost the company $20.00 to make (David does not know the company's cost structure). Included in the $20.00 cost per unit is $2.55 of fixed-MOH and $1.50 of variable-MOH. (a) Your Answer Correct Answer Your answer is correct. How much will operating income change for the small manufacturer if it produces 360 omaments for David and sells them at a special price of $20.00 per unit? (Round per unit calculations to 2 decimal places, eg 15.25 and final answer to 0 decimal places, e.g. 5,125.) Operating income increases (b) eTextbook and Media Solution by $ Your…arrow_forward
- Pacific Decor, Inc., designs, manufactures, and sells contemporary wood furniture. Ling Li is a furniture designer for Pacific. Li has spent much of the past month working on the design of a high-end dining room table. The design has been well-received by Jose Alvarez, the product development manager. However, Alvarez wants to make sure that the table can be priced competitively. Amy Hoover, Pacific's cost accountant, presents Alvarez with the following cost data for the expected production of 200 tables: Design cost $ 5,000 Direct materials 120,000 Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead 142,000 64,000 46,500 Marketing 15,000 1. Alvarez thinks that Pacific can successfully market the table for $2,000. The company's target operating income is 10% of revenue. Calculate the target full cost of producing the 200 tables. Does the cost estimate developed by Hoover meet Pacific's requirements? Is value engineering needed? 2. Alvarez discovers…arrow_forwardEllie now had two offers to think about. Her initial reaction was to turn down the special request for 25,000 brochures at $10 per 100. Especially as she did not believe Tyco would realize any repeat or future business from the customer. She also needed to understand her costs versus the cost offered by the small shop to increase Tyco's printing capacity by outsourcing. Should she tell the small shop about the special order request and let them work it out themselves? They might both get what they needed.arrow_forwardLeno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All- Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $100. Given its experience, Leno believes the All-Body suit would have the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total costs (a1) Selling price $ eTextbook and Media $29 Save for Later 29 Assume that Leno uses cost-plus pricing, setting the selling price 26% above its costs. What would be the price charged for the All- Body swimsuit? 42 $100 Assistance Used Attempts: 0 of 3 used Submit Answerarrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College