Hi,I am looking for the solution of the attached files, it’s related to accounting class (Financial intelligence for strategic decision making). There are 12 question. Please see below
1.
As an analyst at Delta Airlines, you are asked to help the
operations staff. Operations has identified a new method of
loading baggage
that is expected to result in a 30 percent reduction in labor
time but no
changes in any other costs. The current labor cost to load
bags is $2 per
bag. Other costs are $1 per bag.
Required:
a.
What differential
costs should the operations staff consider for the decision
to use the new
method next year? What would be the cost savings per bag
using it?(Round your answer to 2
decimal places.)
Differential cost:_________
b.
Describe how
management would use the information in requirement (a) and
any other
appropriate information to proceed with the contemplated use
of the new
baggage loading method.
Management would use the information, but would also
want to know the effect on quality.
Management would make their decision based strictly
on the differential costs.
Differential costs would not play a significant role
in management’s decision.
2.
State University Business School (SUBS) offers several
degrees,
including Bachelor of Business Administration (BBA). The new
dean believes in
using cost accounting information to make decisions and is
reviewing a
staff-developed income statement broken down by the degree
offered. The dean
is considering closing down the BBA program because the
analysis, which
follows, shows a loss. Tuition increases are not possible.
The dean has asked
for your advice. If the BBA degree program is dropped, school
administration
costs are not expected to change, but direct costs of the
program, such as
operating costs, building maintenance, and classroom costs,
would be saved.
There will be no other changes in the operations or costs of
other programs.
STATE UNIVERSITY
BUSINESS SCHOOL, BBA DEGREE
Degree Income Statement
For the Academic Year Ending June 30
Revenue
$
425,000
Costs
Advertising—BBA
program
20,000
Faculty
salaries
210,000
Degree
operating costs (part-time staff)
24,000
Building
maintenance
34,000
Classroom
costs (building depreciation)
90,000
Allocated
school administration costs
55,000
Total
costs
$
433,000
Net loss
$
(8,000)
Required:
What revenues and
costs are probably differential for the decision to drop the
BBA program?
3.
The following data apply to the provision of psychological
testing services.
Sales
price per unit (1 unit = 1 test plus feedback to client)
$
350
Fixed
costs (per month):
Selling
and administration
20,000
Production
overhead (e.g., rent of testing facilities)
22,000
Variable
costs (per test):
Labor
for oversight and feedback
160
Outsourced
test analysis
22
Materials
used in testing
5
Production
overhead
13
Selling
and administration (e.g., scheduling and billing)
12
Number
of tests per month
500
tests
Required:
Calculate the amount
for each of the following (one unit = one test) if the number
of tests is
500 per month. Also calculate if the number of tests
decreases to 400 per
month.
4.
Greg’s Diner has the following information for year 2, when
several new employees were added to the waitstaff:
Sales
revenue
$
120,000
Cost of
food serveda
43,200
Employee
wages and salariesb
16,800
Manager
salariesc
24,000
Building
costs (rent, utilities, etc.)d
17,000
a
5 percent of this
cost was for food that was not used by the expiration date
and 10 percent
was for food that was incorrectly prepared because of errors
in orders
taken.
b
15 percent of this
cost was for time spent by cooks to reprepare orders that
were incorrectly
prepared because of errors in orders taken.
c
20 percent of this
cost was time taken to address customer complaints about
incorrect orders.
d
100 percent of the
building was used.
Required:
(a)
Using the
traditional income statement format, prepare a value income
statement.
(b)
What value would
there be to Greg from preparing the same information in year
3?
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
nonvalue-added activities.
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
value-added activities.
5.
The City of Imperial Falls contracts with Evergreen Waste
Collection to provide solid waste collection to households
and businesses.
Until recently, Evergreen had an exclusive franchise to
provide this service
in Imperial Falls, which meant that other waste collection
firms could not
operate legally in the city. The price per pound of waste
collected was
regulated at 20 percent above the average total cost of
collection.
Cost
data for the most recent year of operations for Evergreen are
as follows:
Administrative
cost
$
400,000
Operating
costs—trucks
1,280,000
Other
collection costs
320,000
Data on customers for
the most recent year are:
Households
Businesses
Number of
customers
12,000
3,000
Waste
collected (tons)
4,000
12,000
The City Council of
Imperial Falls 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 neighboring cities, the price that other
private waste
collection firms will charge is estimated to be $0.04 per
pound (= $80 per
ton).
Evergreen’s
CEO has approached the city council with a proposal to change
the way costs
are allocated to households and businesses, which will result
in different
rates for households and businesses. She proposes that
administrative costs
and truck operating costs be allocated based on the number of
customers and
the other collection costs be allocated based on pounds
collected. The total
costs allocated to households would then be divided by the
estimated number
of pounds collected from households to determine the cost of
collection. The
rate would then be 20 percent above the cost. The rate for
businesses would
be determined using the same calculation.
Required:
(a)
Based on cost data
from the most recent year, what is the price per pound
charged by Evergreen
for waste collection under the current system (the same rate
for both types
of customers)? (Do not round your intermediate calculations.
Round your
answer to 3 decimal places.)
Price per pound:______
(b)
Based on cost and
waste data from the most recent year, what would be the price
per pound
charged to households and to businesses by Evergreen for
waste collection if
the CEO’s proposal were accepted?(Do not round your
intermediate calculations.
Round your answers to 4 decimal places.)
House hold:____________ Price
per poundBusiness:__________ Price per pound
6.
Assume that Ocean King Products sells three varieties of
canned
seafood with the following prices and costs:
Selling Price
per Case
Variable Cost
per Case
Fixed Cost
per Month
Variety 1
$
11
$
9
–
Variety 2
9
7
–
Variety 3
14
10
–
Entire
firm
–
–
$
47,000
The sales mix (in
cases) is 50 percent Variety 1, 25 percent Variety 2, and 25
percent Variety
3.
Required:
(a)
At what sales revenue
per month does the company break even?(Do not round your
intermediate
calculation.)
Break-even revenue:___________
(b)
Suppose the company is
subject to a 35 percent tax rate on income. At what sales
revenue per month
will the company earn $44,330 after taxes assuming the same
sales mix?(Do not round your intermediate
calculation.)
Sales revenue:______________
7.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
360
per unit
Variable
costs
140
per unit
Fixed
costs
203,000
per month
Required:
(a)
What number must
Cambridge sell per month to break even?(Round up your final
answer to the nearest whole
dollar.)
break
even sale unit:_________
(b)
What number must
Cambridge sell to make an operating profit of $166,000 for
the month?(Round up your final
answer to the nearest whole dollar.)
Number of unit sold:_____________
8.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
16
per unit
Variable
costs
8
per unit
Fixed
costs
21,000
per year
Assume that the
projected number of units sold for the year is 5,500.
Consider requirements (b),
(c), and (d) independently of each other.
Required:
(a)
What will the
operating profit be?
Operating profit:___________
9.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
69
per unit
Variable
costs
38
per unit
Fixed
costs
96,100
per month
Required:
Using the Goal Seek
function in Microsoft Excel,
(a)
What number must
Cambridge sell to break even?
break
even sale unit:__________
(b)
What number must
Cambridge sell to make an operating profit of $31,000 per
month?
Number of unit sold:_______________
10.
Durant Manufacturers has performed extensive studies on its
costs and production and estimates the following annual costs
based on
157,000 units (produced and sold):
Total Annual
Costs
(157,000 units)
Direct
material
$
282,000
Direct
labor
254,000
Manufacturing
overhead
221,000
Selling,
general, and administrative
149,000
Total
$
906,000
Required:
(a)
Compute Durant’s unit
selling price that will yield a profit of $491,300, given
sales of 157,000
units.(Round your answer to 2
decimal places.)
Selling price:___________
11.
Mel’s Meals 2 Go purchases cookies that it includes in the
10,000 box lunches it prepares and sells annually. Mel’s
kitchen and
adjoining meeting room operate at 70 percent of capacity.
Mel’s purchases the
cookies for $1.00 each but is considering making them
instead. Mel’s can bake
each cookie for $.30 for materials, $.25 for direct labor,
and $.65 for
overhead without increasing its capacity. The $.65 for
overhead includes an
allocation of $.40 per cookie for fixed overhead. However,
total fixed
overhead for the company would not increase if Mel’s makes
the cookies.
Mel
himself has come to you for advice. “It would cost me $1.20
to make the
cookies, but only $1.00 to buy. Should I continue buying
them?”
Materials and labor are variable costs, but variable overhead
would be only
$.25 per cookie. Two cookies are put into every lunch.
Required:
a.
Prepare a schedule to
show the differential costs per cookie. (Round your answers
to 2 decimal places.)
12.
Dino’s, Inc., makes a variety of T-shirts with logos. The
company has discovered a new market for sweatshirts with
logos. Market
research indicates that a sweatshirt like this would sell
well in the market
priced at $46.80 each. Dino’s desires an operating profit of
20 percent of
costs.
Required:
What is the highest
acceptable manufacturing cost for which Dino’s would be
willing to produce
the sweatshirt? (Round your answer to 2 decimal places.)
Highest acceptable manufacturing cost:_________
Hi,I am looking for the solution of the attached files, it’s related to accounting class (Financial intelligence for strategic decision making). There are 12 question. Please see below
1.
As an analyst at Delta Airlines, you are asked to help the
operations staff. Operations has identified a new method of
loading baggage
that is expected to result in a 30 percent reduction in labor
time but no
changes in any other costs. The current labor cost to load
bags is $2 per
bag. Other costs are $1 per bag.
Required:
a.
What differential
costs should the operations staff consider for the decision
to use the new
method next year? What would be the cost savings per bag
using it?(Round your answer to 2
decimal places.)
Differential cost:_________
b.
Describe how
management would use the information in requirement (a) and
any other
appropriate information to proceed with the contemplated use
of the new
baggage loading method.
Management would use the information, but would also
want to know the effect on quality.
Management would make their decision based strictly
on the differential costs.
Differential costs would not play a significant role
in management’s decision.
2.
State University Business School (SUBS) offers several
degrees,
including Bachelor of Business Administration (BBA). The new
dean believes in
using cost accounting information to make decisions and is
reviewing a
staff-developed income statement broken down by the degree
offered. The dean
is considering closing down the BBA program because the
analysis, which
follows, shows a loss. Tuition increases are not possible.
The dean has asked
for your advice. If the BBA degree program is dropped, school
administration
costs are not expected to change, but direct costs of the
program, such as
operating costs, building maintenance, and classroom costs,
would be saved.
There will be no other changes in the operations or costs of
other programs.
STATE UNIVERSITY
BUSINESS SCHOOL, BBA DEGREE
Degree Income Statement
For the Academic Year Ending June 30
Revenue
$
425,000
Costs
Advertising—BBA
program
20,000
Faculty
salaries
210,000
Degree
operating costs (part-time staff)
24,000
Building
maintenance
34,000
Classroom
costs (building depreciation)
90,000
Allocated
school administration costs
55,000
Total
costs
$
433,000
Net loss
$
(8,000)
Required:
What revenues and
costs are probably differential for the decision to drop the
BBA program?
3.
The following data apply to the provision of psychological
testing services.
Sales
price per unit (1 unit = 1 test plus feedback to client)
$
350
Fixed
costs (per month):
Selling
and administration
20,000
Production
overhead (e.g., rent of testing facilities)
22,000
Variable
costs (per test):
Labor
for oversight and feedback
160
Outsourced
test analysis
22
Materials
used in testing
5
Production
overhead
13
Selling
and administration (e.g., scheduling and billing)
12
Number
of tests per month
500
tests
Required:
Calculate the amount
for each of the following (one unit = one test) if the number
of tests is
500 per month. Also calculate if the number of tests
decreases to 400 per
month.
4.
Greg’s Diner has the following information for year 2, when
several new employees were added to the waitstaff:
Sales
revenue
$
120,000
Cost of
food serveda
43,200
Employee
wages and salariesb
16,800
Manager
salariesc
24,000
Building
costs (rent, utilities, etc.)d
17,000
a
5 percent of this
cost was for food that was not used by the expiration date
and 10 percent
was for food that was incorrectly prepared because of errors
in orders
taken.
b
15 percent of this
cost was for time spent by cooks to reprepare orders that
were incorrectly
prepared because of errors in orders taken.
c
20 percent of this
cost was time taken to address customer complaints about
incorrect orders.
d
100 percent of the
building was used.
Required:
(a)
Using the
traditional income statement format, prepare a value income
statement.
(b)
What value would
there be to Greg from preparing the same information in year
3?
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
nonvalue-added activities.
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
value-added activities.
5.
The City of Imperial Falls contracts with Evergreen Waste
Collection to provide solid waste collection to households
and businesses.
Until recently, Evergreen had an exclusive franchise to
provide this service
in Imperial Falls, which meant that other waste collection
firms could not
operate legally in the city. The price per pound of waste
collected was
regulated at 20 percent above the average total cost of
collection.
Cost
data for the most recent year of operations for Evergreen are
as follows:
Administrative
cost
$
400,000
Operating
costs—trucks
1,280,000
Other
collection costs
320,000
Data on customers for
the most recent year are:
Households
Businesses
Number of
customers
12,000
3,000
Waste
collected (tons)
4,000
12,000
The City Council of
Imperial Falls 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 neighboring cities, the price that other
private waste
collection firms will charge is estimated to be $0.04 per
pound (= $80 per
ton).
Evergreen’s
CEO has approached the city council with a proposal to change
the way costs
are allocated to households and businesses, which will result
in different
rates for households and businesses. She proposes that
administrative costs
and truck operating costs be allocated based on the number of
customers and
the other collection costs be allocated based on pounds
collected. The total
costs allocated to households would then be divided by the
estimated number
of pounds collected from households to determine the cost of
collection. The
rate would then be 20 percent above the cost. The rate for
businesses would
be determined using the same calculation.
Required:
(a)
Based on cost data
from the most recent year, what is the price per pound
charged by Evergreen
for waste collection under the current system (the same rate
for both types
of customers)? (Do not round your intermediate calculations.
Round your
answer to 3 decimal places.)
Price per pound:______
(b)
Based on cost and
waste data from the most recent year, what would be the price
per pound
charged to households and to businesses by Evergreen for
waste collection if
the CEO’s proposal were accepted?(Do not round your
intermediate calculations.
Round your answers to 4 decimal places.)
House hold:____________ Price
per poundBusiness:__________ Price per pound
6.
Assume that Ocean King Products sells three varieties of
canned
seafood with the following prices and costs:
Selling Price
per Case
Variable Cost
per Case
Fixed Cost
per Month
Variety 1
$
11
$
9
–
Variety 2
9
7
–
Variety 3
14
10
–
Entire
firm
–
–
$
47,000
The sales mix (in
cases) is 50 percent Variety 1, 25 percent Variety 2, and 25
percent Variety
3.
Required:
(a)
At what sales revenue
per month does the company break even?(Do not round your
intermediate
calculation.)
Break-even revenue:___________
(b)
Suppose the company is
subject to a 35 percent tax rate on income. At what sales
revenue per month
will the company earn $44,330 after taxes assuming the same
sales mix?(Do not round your intermediate
calculation.)
Sales revenue:______________
7.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
360
per unit
Variable
costs
140
per unit
Fixed
costs
203,000
per month
Required:
(a)
What number must
Cambridge sell per month to break even?(Round up your final
answer to the nearest whole
dollar.)
break
even sale unit:_________
(b)
What number must
Cambridge sell to make an operating profit of $166,000 for
the month?(Round up your final
answer to the nearest whole dollar.)
Number of unit sold:_____________
8.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
16
per unit
Variable
costs
8
per unit
Fixed
costs
21,000
per year
Assume that the
projected number of units sold for the year is 5,500.
Consider requirements (b),
(c), and (d) independently of each other.
Required:
(a)
What will the
operating profit be?
Operating profit:___________
9.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
69
per unit
Variable
costs
38
per unit
Fixed
costs
96,100
per month
Required:
Using the Goal Seek
function in Microsoft Excel,
(a)
What number must
Cambridge sell to break even?
break
even sale unit:__________
(b)
What number must
Cambridge sell to make an operating profit of $31,000 per
month?
Number of unit sold:_______________
10.
Durant Manufacturers has performed extensive studies on its
costs and production and estimates the following annual costs
based on
157,000 units (produced and sold):
Total Annual
Costs
(157,000 units)
Direct
material
$
282,000
Direct
labor
254,000
Manufacturing
overhead
221,000
Selling,
general, and administrative
149,000
Total
$
906,000
Required:
(a)
Compute Durant’s unit
selling price that will yield a profit of $491,300, given
sales of 157,000
units.(Round your answer to 2
decimal places.)
Selling price:___________
11.
Mel’s Meals 2 Go purchases cookies that it includes in the
10,000 box lunches it prepares and sells annually. Mel’s
kitchen and
adjoining meeting room operate at 70 percent of capacity.
Mel’s purchases the
cookies for $1.00 each but is considering making them
instead. Mel’s can bake
each cookie for $.30 for materials, $.25 for direct labor,
and $.65 for
overhead without increasing its capacity. The $.65 for
overhead includes an
allocation of $.40 per cookie for fixed overhead. However,
total fixed
overhead for the company would not increase if Mel’s makes
the cookies.
Mel
himself has come to you for advice. “It would cost me $1.20
to make the
cookies, but only $1.00 to buy. Should I continue buying
them?”
Materials and labor are variable costs, but variable overhead
would be only
$.25 per cookie. Two cookies are put into every lunch.
Required:
a.
Prepare a schedule to
show the differential costs per cookie. (Round your answers
to 2 decimal places.)
12.
Dino’s, Inc., makes a variety of T-shirts with logos. The
company has discovered a new market for sweatshirts with
logos. Market
research indicates that a sweatshirt like this would sell
well in the market
priced at $46.80 each. Dino’s desires an operating profit of
20 percent of
costs.
Required:
What is the highest
acceptable manufacturing cost for which Dino’s would be
willing to produce
the sweatshirt? (Round your answer to 2 decimal places.)
Highest acceptable manufacturing cost:_________
Hi,I am looking for the solution of the attached files, it’s related to accounting class (Financial intelligence for strategic decision making). There are 12 question. Please see below
1.
As an analyst at Delta Airlines, you are asked to help the
operations staff. Operations has identified a new method of
loading baggage
that is expected to result in a 30 percent reduction in labor
time but no
changes in any other costs. The current labor cost to load
bags is $2 per
bag. Other costs are $1 per bag.
Required:
a.
What differential
costs should the operations staff consider for the decision
to use the new
method next year? What would be the cost savings per bag
using it?(Round your answer to 2
decimal places.)
Differential cost:_________
b.
Describe how
management would use the information in requirement (a) and
any other
appropriate information to proceed with the contemplated use
of the new
baggage loading method.
Management would use the information, but would also
want to know the effect on quality.
Management would make their decision based strictly
on the differential costs.
Differential costs would not play a significant role
in management’s decision.
2.
State University Business School (SUBS) offers several
degrees,
including Bachelor of Business Administration (BBA). The new
dean believes in
using cost accounting information to make decisions and is
reviewing a
staff-developed income statement broken down by the degree
offered. The dean
is considering closing down the BBA program because the
analysis, which
follows, shows a loss. Tuition increases are not possible.
The dean has asked
for your advice. If the BBA degree program is dropped, school
administration
costs are not expected to change, but direct costs of the
program, such as
operating costs, building maintenance, and classroom costs,
would be saved.
There will be no other changes in the operations or costs of
other programs.
STATE UNIVERSITY
BUSINESS SCHOOL, BBA DEGREE
Degree Income Statement
For the Academic Year Ending June 30
Revenue
$
425,000
Costs
Advertising—BBA
program
20,000
Faculty
salaries
210,000
Degree
operating costs (part-time staff)
24,000
Building
maintenance
34,000
Classroom
costs (building depreciation)
90,000
Allocated
school administration costs
55,000
Total
costs
$
433,000
Net loss
$
(8,000)
Required:
What revenues and
costs are probably differential for the decision to drop the
BBA program?
3.
The following data apply to the provision of psychological
testing services.
Sales
price per unit (1 unit = 1 test plus feedback to client)
$
350
Fixed
costs (per month):
Selling
and administration
20,000
Production
overhead (e.g., rent of testing facilities)
22,000
Variable
costs (per test):
Labor
for oversight and feedback
160
Outsourced
test analysis
22
Materials
used in testing
5
Production
overhead
13
Selling
and administration (e.g., scheduling and billing)
12
Number
of tests per month
500
tests
Required:
Calculate the amount
for each of the following (one unit = one test) if the number
of tests is
500 per month. Also calculate if the number of tests
decreases to 400 per
month.
4.
Greg’s Diner has the following information for year 2, when
several new employees were added to the waitstaff:
Sales
revenue
$
120,000
Cost of
food serveda
43,200
Employee
wages and salariesb
16,800
Manager
salariesc
24,000
Building
costs (rent, utilities, etc.)d
17,000
a
5 percent of this
cost was for food that was not used by the expiration date
and 10 percent
was for food that was incorrectly prepared because of errors
in orders
taken.
b
15 percent of this
cost was for time spent by cooks to reprepare orders that
were incorrectly
prepared because of errors in orders taken.
c
20 percent of this
cost was time taken to address customer complaints about
incorrect orders.
d
100 percent of the
building was used.
Required:
(a)
Using the
traditional income statement format, prepare a value income
statement.
(b)
What value would
there be to Greg from preparing the same information in year
3?
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
nonvalue-added activities.
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
value-added activities.
5.
The City of Imperial Falls contracts with Evergreen Waste
Collection to provide solid waste collection to households
and businesses.
Until recently, Evergreen had an exclusive franchise to
provide this service
in Imperial Falls, which meant that other waste collection
firms could not
operate legally in the city. The price per pound of waste
collected was
regulated at 20 percent above the average total cost of
collection.
Cost
data for the most recent year of operations for Evergreen are
as follows:
Administrative
cost
$
400,000
Operating
costs—trucks
1,280,000
Other
collection costs
320,000
Data on customers for
the most recent year are:
Households
Businesses
Number of
customers
12,000
3,000
Waste
collected (tons)
4,000
12,000
The City Council of
Imperial Falls 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 neighboring cities, the price that other
private waste
collection firms will charge is estimated to be $0.04 per
pound (= $80 per
ton).
Evergreen’s
CEO has approached the city council with a proposal to change
the way costs
are allocated to households and businesses, which will result
in different
rates for households and businesses. She proposes that
administrative costs
and truck operating costs be allocated based on the number of
customers and
the other collection costs be allocated based on pounds
collected. The total
costs allocated to households would then be divided by the
estimated number
of pounds collected from households to determine the cost of
collection. The
rate would then be 20 percent above the cost. The rate for
businesses would
be determined using the same calculation.
Required:
(a)
Based on cost data
from the most recent year, what is the price per pound
charged by Evergreen
for waste collection under the current system (the same rate
for both types
of customers)? (Do not round your intermediate calculations.
Round your
answer to 3 decimal places.)
Price per pound:______
(b)
Based on cost and
waste data from the most recent year, what would be the price
per pound
charged to households and to businesses by Evergreen for
waste collection if
the CEO’s proposal were accepted?(Do not round your
intermediate calculations.
Round your answers to 4 decimal places.)
House hold:____________ Price
per poundBusiness:__________ Price per pound
6.
Assume that Ocean King Products sells three varieties of
canned
seafood with the following prices and costs:
Selling Price
per Case
Variable Cost
per Case
Fixed Cost
per Month
Variety 1
$
11
$
9
–
Variety 2
9
7
–
Variety 3
14
10
–
Entire
firm
–
–
$
47,000
The sales mix (in
cases) is 50 percent Variety 1, 25 percent Variety 2, and 25
percent Variety
3.
Required:
(a)
At what sales revenue
per month does the company break even?(Do not round your
intermediate
calculation.)
Break-even revenue:___________
(b)
Suppose the company is
subject to a 35 percent tax rate on income. At what sales
revenue per month
will the company earn $44,330 after taxes assuming the same
sales mix?(Do not round your intermediate
calculation.)
Sales revenue:______________
7.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
360
per unit
Variable
costs
140
per unit
Fixed
costs
203,000
per month
Required:
(a)
What number must
Cambridge sell per month to break even?(Round up your final
answer to the nearest whole
dollar.)
break
even sale unit:_________
(b)
What number must
Cambridge sell to make an operating profit of $166,000 for
the month?(Round up your final
answer to the nearest whole dollar.)
Number of unit sold:_____________
8.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
16
per unit
Variable
costs
8
per unit
Fixed
costs
21,000
per year
Assume that the
projected number of units sold for the year is 5,500.
Consider requirements (b),
(c), and (d) independently of each other.
Required:
(a)
What will the
operating profit be?
Operating profit:___________
9.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
69
per unit
Variable
costs
38
per unit
Fixed
costs
96,100
per month
Required:
Using the Goal Seek
function in Microsoft Excel,
(a)
What number must
Cambridge sell to break even?
break
even sale unit:__________
(b)
What number must
Cambridge sell to make an operating profit of $31,000 per
month?
Number of unit sold:_______________
10.
Durant Manufacturers has performed extensive studies on its
costs and production and estimates the following annual costs
based on
157,000 units (produced and sold):
Total Annual
Costs
(157,000 units)
Direct
material
$
282,000
Direct
labor
254,000
Manufacturing
overhead
221,000
Selling,
general, and administrative
149,000
Total
$
906,000
Required:
(a)
Compute Durant’s unit
selling price that will yield a profit of $491,300, given
sales of 157,000
units.(Round your answer to 2
decimal places.)
Selling price:___________
11.
Mel’s Meals 2 Go purchases cookies that it includes in the
10,000 box lunches it prepares and sells annually. Mel’s
kitchen and
adjoining meeting room operate at 70 percent of capacity.
Mel’s purchases the
cookies for $1.00 each but is considering making them
instead. Mel’s can bake
each cookie for $.30 for materials, $.25 for direct labor,
and $.65 for
overhead without increasing its capacity. The $.65 for
overhead includes an
allocation of $.40 per cookie for fixed overhead. However,
total fixed
overhead for the company would not increase if Mel’s makes
the cookies.
Mel
himself has come to you for advice. “It would cost me $1.20
to make the
cookies, but only $1.00 to buy. Should I continue buying
them?”
Materials and labor are variable costs, but variable overhead
would be only
$.25 per cookie. Two cookies are put into every lunch.
Required:
a.
Prepare a schedule to
show the differential costs per cookie. (Round your answers
to 2 decimal places.)
12.
Dino’s, Inc., makes a variety of T-shirts with logos. The
company has discovered a new market for sweatshirts with
logos. Market
research indicates that a sweatshirt like this would sell
well in the market
priced at $46.80 each. Dino’s desires an operating profit of
20 percent of
costs.
Required:
What is the highest
acceptable manufacturing cost for which Dino’s would be
willing to produce
the sweatshirt? (Round your answer to 2 decimal places.)
Highest acceptable manufacturing cost:_________
Hi,I am looking for the solution of the attached files, it’s related to accounting class (Financial intelligence for strategic decision making). There are 12 question. Please see below
1.
As an analyst at Delta Airlines, you are asked to help the
operations staff. Operations has identified a new method of
loading baggage
that is expected to result in a 30 percent reduction in labor
time but no
changes in any other costs. The current labor cost to load
bags is $2 per
bag. Other costs are $1 per bag.
Required:
a.
What differential
costs should the operations staff consider for the decision
to use the new
method next year? What would be the cost savings per bag
using it?(Round your answer to 2
decimal places.)
Differential cost:_________
b.
Describe how
management would use the information in requirement (a) and
any other
appropriate information to proceed with the contemplated use
of the new
baggage loading method.
Management would use the information, but would also
want to know the effect on quality.
Management would make their decision based strictly
on the differential costs.
Differential costs would not play a significant role
in management’s decision.
2.
State University Business School (SUBS) offers several
degrees,
including Bachelor of Business Administration (BBA). The new
dean believes in
using cost accounting information to make decisions and is
reviewing a
staff-developed income statement broken down by the degree
offered. The dean
is considering closing down the BBA program because the
analysis, which
follows, shows a loss. Tuition increases are not possible.
The dean has asked
for your advice. If the BBA degree program is dropped, school
administration
costs are not expected to change, but direct costs of the
program, such as
operating costs, building maintenance, and classroom costs,
would be saved.
There will be no other changes in the operations or costs of
other programs.
STATE UNIVERSITY
BUSINESS SCHOOL, BBA DEGREE
Degree Income Statement
For the Academic Year Ending June 30
Revenue
$
425,000
Costs
Advertising—BBA
program
20,000
Faculty
salaries
210,000
Degree
operating costs (part-time staff)
24,000
Building
maintenance
34,000
Classroom
costs (building depreciation)
90,000
Allocated
school administration costs
55,000
Total
costs
$
433,000
Net loss
$
(8,000)
Required:
What revenues and
costs are probably differential for the decision to drop the
BBA program?
3.
The following data apply to the provision of psychological
testing services.
Sales
price per unit (1 unit = 1 test plus feedback to client)
$
350
Fixed
costs (per month):
Selling
and administration
20,000
Production
overhead (e.g., rent of testing facilities)
22,000
Variable
costs (per test):
Labor
for oversight and feedback
160
Outsourced
test analysis
22
Materials
used in testing
5
Production
overhead
13
Selling
and administration (e.g., scheduling and billing)
12
Number
of tests per month
500
tests
Required:
Calculate the amount
for each of the following (one unit = one test) if the number
of tests is
500 per month. Also calculate if the number of tests
decreases to 400 per
month.
4.
Greg’s Diner has the following information for year 2, when
several new employees were added to the waitstaff:
Sales
revenue
$
120,000
Cost of
food serveda
43,200
Employee
wages and salariesb
16,800
Manager
salariesc
24,000
Building
costs (rent, utilities, etc.)d
17,000
a
5 percent of this
cost was for food that was not used by the expiration date
and 10 percent
was for food that was incorrectly prepared because of errors
in orders
taken.
b
15 percent of this
cost was for time spent by cooks to reprepare orders that
were incorrectly
prepared because of errors in orders taken.
c
20 percent of this
cost was time taken to address customer complaints about
incorrect orders.
d
100 percent of the
building was used.
Required:
(a)
Using the
traditional income statement format, prepare a value income
statement.
(b)
What value would
there be to Greg from preparing the same information in year
3?
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
nonvalue-added activities.
Preparing a year 3
statement helps Greg see whether the company is improving in
reducing
value-added activities.
5.
The City of Imperial Falls contracts with Evergreen Waste
Collection to provide solid waste collection to households
and businesses.
Until recently, Evergreen had an exclusive franchise to
provide this service
in Imperial Falls, which meant that other waste collection
firms could not
operate legally in the city. The price per pound of waste
collected was
regulated at 20 percent above the average total cost of
collection.
Cost
data for the most recent year of operations for Evergreen are
as follows:
Administrative
cost
$
400,000
Operating
costs—trucks
1,280,000
Other
collection costs
320,000
Data on customers for
the most recent year are:
Households
Businesses
Number of
customers
12,000
3,000
Waste
collected (tons)
4,000
12,000
The City Council of
Imperial Falls 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 neighboring cities, the price that other
private waste
collection firms will charge is estimated to be $0.04 per
pound (= $80 per
ton).
Evergreen’s
CEO has approached the city council with a proposal to change
the way costs
are allocated to households and businesses, which will result
in different
rates for households and businesses. She proposes that
administrative costs
and truck operating costs be allocated based on the number of
customers and
the other collection costs be allocated based on pounds
collected. The total
costs allocated to households would then be divided by the
estimated number
of pounds collected from households to determine the cost of
collection. The
rate would then be 20 percent above the cost. The rate for
businesses would
be determined using the same calculation.
Required:
(a)
Based on cost data
from the most recent year, what is the price per pound
charged by Evergreen
for waste collection under the current system (the same rate
for both types
of customers)? (Do not round your intermediate calculations.
Round your
answer to 3 decimal places.)
Price per pound:______
(b)
Based on cost and
waste data from the most recent year, what would be the price
per pound
charged to households and to businesses by Evergreen for
waste collection if
the CEO’s proposal were accepted?(Do not round your
intermediate calculations.
Round your answers to 4 decimal places.)
House hold:____________ Price
per poundBusiness:__________ Price per pound
6.
Assume that Ocean King Products sells three varieties of
canned
seafood with the following prices and costs:
Selling Price
per Case
Variable Cost
per Case
Fixed Cost
per Month
Variety 1
$
11
$
9
–
Variety 2
9
7
–
Variety 3
14
10
–
Entire
firm
–
–
$
47,000
The sales mix (in
cases) is 50 percent Variety 1, 25 percent Variety 2, and 25
percent Variety
3.
Required:
(a)
At what sales revenue
per month does the company break even?(Do not round your
intermediate
calculation.)
Break-even revenue:___________
(b)
Suppose the company is
subject to a 35 percent tax rate on income. At what sales
revenue per month
will the company earn $44,330 after taxes assuming the same
sales mix?(Do not round your intermediate
calculation.)
Sales revenue:______________
7.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
360
per unit
Variable
costs
140
per unit
Fixed
costs
203,000
per month
Required:
(a)
What number must
Cambridge sell per month to break even?(Round up your final
answer to the nearest whole
dollar.)
break
even sale unit:_________
(b)
What number must
Cambridge sell to make an operating profit of $166,000 for
the month?(Round up your final
answer to the nearest whole dollar.)
Number of unit sold:_____________
8.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
16
per unit
Variable
costs
8
per unit
Fixed
costs
21,000
per year
Assume that the
projected number of units sold for the year is 5,500.
Consider requirements (b),
(c), and (d) independently of each other.
Required:
(a)
What will the
operating profit be?
Operating profit:___________
9.
Cambridge, Inc., is considering the introduction of a new
calculator with the following price and cost
characteristics:
Sales
price
$
69
per unit
Variable
costs
38
per unit
Fixed
costs
96,100
per month
Required:
Using the Goal Seek
function in Microsoft Excel,
(a)
What number must
Cambridge sell to break even?
break
even sale unit:__________
(b)
What number must
Cambridge sell to make an operating profit of $31,000 per
month?
Number of unit sold:_______________
10.
Durant Manufacturers has performed extensive studies on its
costs and production and estimates the following annual costs
based on
157,000 units (produced and sold):
Total Annual
Costs
(157,000 units)
Direct
material
$
282,000
Direct
labor
254,000
Manufacturing
overhead
221,000
Selling,
general, and administrative
149,000
Total
$
906,000
Required:
(a)
Compute Durant’s unit
selling price that will yield a profit of $491,300, given
sales of 157,000
units.(Round your answer to 2
decimal places.)
Selling price:___________
11.
Mel’s Meals 2 Go purchases cookies that it includes in the
10,000 box lunches it prepares and sells annually. Mel’s
kitchen and
adjoining meeting room operate at 70 percent of capacity.
Mel’s purchases the
cookies for $1.00 each but is considering making them
instead. Mel’s can bake
each cookie for $.30 for materials, $.25 for direct labor,
and $.65 for
overhead without increasing its capacity. The $.65 for
overhead includes an
allocation of $.40 per cookie for fixed overhead. However,
total fixed
overhead for the company would not increase if Mel’s makes
the cookies.
Mel
himself has come to you for advice. “It would cost me $1.20
to make the
cookies, but only $1.00 to buy. Should I continue buying
them?”
Materials and labor are variable costs, but variable overhead
would be only
$.25 per cookie. Two cookies are put into every lunch.
Required:
a.
Prepare a schedule to
show the differential costs per cookie. (Round your answers
to 2 decimal places.)
12.
Dino’s, Inc., makes a variety of T-shirts with logos. The
company has discovered a new market for sweatshirts with
logos. Market
research indicates that a sweatshirt like this would sell
well in the market
priced at $46.80 each. Dino’s desires an operating profit of
20 percent of
costs.
Required:
What is the highest
acceptable manufacturing cost for which Dino’s would be
willing to produce
the sweatshirt? (Round your answer to 2 decimal places.)
Highest acceptable manufacturing cost:_________
