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[answered] A customer has requested that Gamba Corporation fill a spec


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A customer has requested that Gamba Corporation fill a special order for 2,700 units of

 

product Q41 for $32 a unit. While the product would be modified slightly for the special order,

 

product Q41 normal unit product cost is $22.00: Direct materials $ 6.30 Direct labor 4.00 Variable manufacturing overhead 3.40 Fixed manufacturing overhead 8.30 Unit product cost $22.00 Direct labor is a variable cost. The special order would have no effect on the company's total

 

fixed manufacturing overhead costs. The customer would like modifications made to product

 

Q41 that would increase the variable costs by $1.90 per unit and that would require an

 

investment of $17,000 in special molds that would have no salvage value.

 

This special order would have no effect on the company's other sales. The company has

 

ample spare capacity for producing the special order. If the special order is accepted, the

 

company's overall net operating income would increase (decrease) by:

 

$(16,700).

 

$27,280.

 

$(2,500).

 

$17,200. Eley Corporation produces a single product. The cost of producing and selling a single unit of

 

this product at the company's normal activity level of 40,000 units per month is as follows: Direct materials $58.1 Direct labor $16.1 Variable manufacturing overhead $1.3 Fixed manufacturing overhead $25.6 Variable selling & administrative expense $1.7 Fixed selling & administrative expense $17.3 The normal selling price of the product is $125.8 per unit.

 

An order has been received from an overseas customer for 1,350 units to be delivered this

 

month at a special discounted price. This order would not change the total amount of the

 

company's fixed costs. The variable selling and administrative expense would be $1.1 less

 

per unit on this order than on normal sales.

 

Direct labor is a variable cost in this company.

 

Suppose there is ample idle capacity to produce the units required by the overseas customer

 

and the special discounted price on the special order is $118.3 per unit. By how much would

 

this special order increase (decrease) the company's net operating income for the month?

 

$(16,030)

 

$56,970

 

$(8,030)

 

$22,370 Consider the following production and cost data for two products, Q and P: Contribution margin per unit

 

Machine minutes needed per unit Product Q Product P $30 $24 3 minutes 2 minutes A total of 14,600 machine minutes are available each period, and there is unlimited demand

 

for each product. What is the largest possible total contribution margin that can be realized

 

each period?

 

$165,400

 

$189,800

 

$175,200

 

$160,600 Eley Corporation produces a single product. The cost of producing and selling a single unit of

 

this product at the company's normal activity level of 40,000 units per month is as follows: Direct materials $ 45.0 Direct labor $ 11.0 Variable manufacturing overhead $ 2.4 Fixed manufacturing overhead $ 21.9 Variable selling & administrative expense $ 2.9 Fixed selling & administrative expense $ 8.6 The normal selling price of the product is $98.6 per unit.

 

An order has been received from an overseas customer for 1,900 units to be delivered this

 

month at a special discounted price. This order would not change the total amount of the

 

company's fixed costs. The variable selling and administrative expense would be $2.3 less

 

per unit on this order than on normal sales.

 

Direct labor is a variable cost in this company.

 

What is the contribution margin per unit on normal sales?

 

$9.00

 

$11.30

 

$37.30

 

$13.70 The constraint at Bonavita Corporation is time on a particular machine. The company makes

 

three products that use this machine. Data concerning those products appear below:

 

UN ZG PW Selling price per unit $ 247.00 $ 352.80 $ 168.40 Variable cost per unit $ 184.00 $ 267.88 $ 125.44 Minutes on the constraint 5.10 6.90 3.90 Assume that sufficient time is available on the constrained machine to satisfy demand for all

 

but the least profitable product. Up to how much should the company be willing to pay to

 

acquire more of this constrained resource? (Round your intermediate calculations and

 

final answer to 2 decimal places.)

 

$12.35 cost per unit

 

$11.02 cost per unit

 

$42.96 cost per unit $84.92 cost per unit The constraint at Bonavita Corporation is time on a particular machine. The company makes

 

three products that use this machine. Data concerning those products appear below:

 

UN ZG PW Selling price per unit $ 262.78 $ 498.95 $ 467.10 Variable cost per unit $ 187.30 $ 374.39 $ 339.91 Minutes on the constraint 3.70 7.20 7.90 Rank the products in order of their current profitability from most profitable to least profitable.

 

In other words, rank the products in the order in which they should be emphasized.

 

PW,UN,ZG

 

UN,ZG,PW

 

ZG,PW,UN

 

UN,PW,ZG Yehle Inc. regularly uses material Y51B and currently has in stock 451 liters of the material

 

for which it paid $2,613 several weeks ago. If this were to be sold as is on the open market

 

as surplus material, it would fetch $5.15 per liter. New stocks of the material can be

 

purchased on the open market for $5.75 per liter, but it must be purchased in lots of 1,000

 

liters. You have been asked to determine the relevant cost of 500 liters of the material to be

 

used in a job for a customer. The relevant cost of the 500 liters of material Y51B is:

 

$5,750

 

$2,575

 

$2,608

 

$2,875

 

Tawstir Corporation has 790 obsolete personal computers that are carried in inventory at a

 

total cost of $1,135,230. If these computers are upgraded at a total cost of $55,300, they can

 

be sold for a total of $926,670. As an alternative, the computers can be sold in their present

 

condition for $847,275.

 

The sunk cost in this situation is:

 

$1,135,230

 

$926,670

 

$847,275

 

$55,300 For July, White Corporation has budgeted production of 7,100 units. Each unit requires 0.40

 

direct labor-hours at a cost of $6.30 per direct labor-hour. How much will White Corporation

 

budget for labor in July?

 

$17,892 $19,028

 

$2,840

 

$44,730

 

May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of

 

the year: July

 

August

 

September $89,400

 

$108,000

 

$73,000 Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly

 

ending inventory equal to 135% of the Cost of Goods Sold for the following month. The

 

inventory on June 30 is less than this ideal since it is only $81,883. The company is now

 

preparing a Merchandise Purchases Budget.

 

The budgeted purchases for July are:

 

$67,157

 

$62,580

 

$82,757

 

$110,757

 

The manufacturing overhead budget at Pendley Corporation is based on budgeted direct

 

labor-hours. The direct labor budget indicates that 8,250 direct labor-hours will be required in

 

August. The variable overhead rate is $4.50 per direct labor-hour. The company's budgeted

 

fixed manufacturing overhead is $150,150 per month, which includes depreciation of

 

$28,875. All other fixed manufacturing overhead costs represent current cash flows. The

 

company recomputes its predetermined overhead rate every month. The predetermined

 

overhead rate for August should be:

 

$19.20

 

$18.20

 

$4.50

 

$22.70

 

Adi Manufacturing Corporation is estimating the following raw material purchases for the final

 

four months of the year: September $954,000 October $946,000 November $892,000 December $844,000 At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase.

 

In Adi's budgeted balance sheet at December 31, at what amount will accounts payable for

 

raw materials be shown?

 

$844,000

 

$253,200

 

$624,400

 

$590,800

 


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