Zanatech's market for its remote control has changed significantly and Zanatech has had to drop the selling price per unit from $45 to $38. There are some units in the work in process inventory that have costs of $30 per unit associated with them. Zanatech can sell these units in their current state for $22 each. It will cost Zanatech $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further? O $16 per unit profit O $3 per unit loss O $5 per unit profit O $12 per unit loss
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- Mallory’s Video Supply has changed its focus tremendously and as a result has dropped the selling price of DVD players from $45 to $38. Some units in the work-in-process inventory have costs of $30 per unit associated with them, but Mallory can only sell these units in their current state for $22 each. Otherwise, it will cost Mallory $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further? a. $5 per unit profit b. $3 per unit loss c. $16 per unit profit d. $12 per unit lossKim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $23,000and sold for $28,000. Another alternative is to sell the units to a junk dealer for $8,500. By how much will they be better off?So Hot Ltd has 5,000 units in inventory that cost $1.50 per unit to produce. Due to changing technology, the sales department is having difficulty selling the product. It will cost $2,000 to scrap the units. What is the minimum price for which So Hot should sell these units?
- Helmer Containers manufactures a variety of boxes used for packaging. Sales of its Model A20 box have increased significantly to a total of 460,000 A20 boxes. Helmer has enough existing production capacity to make all of the boxes it needs. The variable cost of making each A20 box is $0.82.By outsourcing the manufacture of these A20 boxes, Helmer can reduce its current fixed costs by $115,000. There is no alternative use for the factory space freed up through outsourcing, so it will just remain idle. What is the maximum Helmer will pay per Model A20 box to outsource production of this box?Kim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $23,000and sold for $28,000. Another alternative is to sell the units to a junk dealer for $8,500. Should Kim Yin Company scrap or rework the units? By how much will they be better off? Please provide the answers as well as the solutions to the questions. Thank you!Hoffman Containers manufactures a variety of boxes used for packaging. Sales of its Model A20 box have increased significantly to a total of 400,000 A20 boxes. Hoffman has enough existing production capacity to make all of the boxes it needs. The variable cost of making each A20 box is $0.75. By outsourcing the manufacture of these A20 boxes, Hoffman can reduce its current fixed costs by $100,000. There is no alternative use for the factory space freed up through outsourcing, so it will just remain idle. What is the maximum Hoffman will pay per Model A20 box to outsource production of this box? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making A20 boxes Cost if outsourcing A20 boxes Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. The maximum Hoffman will pay to outsource production of its A20 boxes is Hoffman would be indifferent between outsourcing and making the…
- At the end of the year the production manager is taking inventory and finds 600 units of an older model of invisible fencing that the company no longer manufactures. These obsolete units can be disposed of through their regular channels, thereby incurring variable marketing expenses. What is the lowest price that they should accept for these obsolete units, realizing that if they do not sell them these units will have to be thrown away. (Show all supporting calculations). (NOTE: ignore taxes or other costs not specifically mentioned in the questions.)Futura Company purchases the 50,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $11.70 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $11.90 as shown below: Per Unit $ 5.00 3.20 Total Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent 1.80 1.00 0.50 0.40 $ 90,000 $ 50,000 $ 20,000 Total production cost $11.90 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $90,000) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $90,000 per period.…Hot Ltd has 5,000 units in inventory that cost $1.50 per unit to produce. Due to changing technology, the sales department is having difficulty selling the product. It will cost $2,000 to scrap the units. The company should consider any price over:
- Futura Company purchases the 70,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $11.60 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $12.40 as shown below: Per Unit Total $ 5.00 Direct materials Direct labor 2.80 Supervision Depreciation Variable manufacturing overhead $ 133,000 $ 98,000 1.90 1.40 0.80 Rent 0.50 $ 35,000 Total product cost $ 12.40 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $133,000) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $81,000 per period.…Futura Company purchases the 67,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $11.40 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $12.10 as shown below: Per Unit $ 5.00 3.00 Total Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost 1.90 1.30 0.40 $ 127,300 $ 87,100 e.50 $ 12.10 $ 33,500 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $127,300) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $84,000 per perlod.…Futura Company purchases the 64,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.40 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company’s chief engineer is opposed to making the starters because the production cost per unit is $13.60 as shown below: Per UnitTotalDirect materials$ 6.00 Direct labor3.20 Supervision1.90$ 121,600Depreciation1.30$ 83,200Variable manufacturing overhead0.70 Rent0.50$ 32,000Total product cost$ 13.60 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $121,600) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $83,000 per period. Depreciation is due to…