Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Question
Chapter 9, Problem 51E
To determine
Make production budget for the year.
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Assume that the operations manager of a small semi-conductor manufacturer
wants to run a Simulation model to better understand the uncertainties related to
cost and demand for a particular product. He assumes that the total cost per month
could be anywhere between $150,000 and $200,000 with equal likelihood. He also
assumes that the demand is normally distributed with a mean of 5,000 items per
month and a standard deviation of 1,000. Each item is sold for $95.
a) Use the random numbers in the following table to simulate the costs, revenues
and profits per month. Use Random Number A to generate the costs and Random
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difference between revenues and costs. Complete the table by reporting the
minimum, maximum and average profit per month according to this simulation.
Trial
1
2
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9
10
you
b) Can
Random A
0.23
you
0.04
0.14
0.07
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B&B has a new baby powder ready to market. If the firm goes directly to the market with
the product, there is only a 55 percent chance of success. However, the firm can
conduct customer segment research, which will take a year and cost $1.18 million. By
going through research, the company will be able to better target potential customers
and will increase the probability of success to 70 percent. If successful, the baby powder
will bring a present value profit (at time of initial selling) of $18.8 million. If unsuccessful,
the present value payoff is only $5.8 million. The appropriate discount rate is 15 percent.
Calculate the NPV for the firm if it goes to market immediately and if it conducts
customer segment research. (Do not round intermediate calculations and enter your
answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g.,
1,234,567.89.)
BLTD is investigating the financial viability of a new product called Wimble.The Wimble is a short life product for which a market has been identified at an agreed design specification.The product will only have a life of 12 months.The following estimated information is available in respect of Wimble.• Sales should be 120,000 in the year in batches of 100 units. An average selling price of K1,050 per batch of 100 units is expected. All sales are for cash.• An 80% learning curve will apply for the first 700 batches after which a steady state production time will apply, with the labour time per batch after the first 700 batches equal to the time for the 700th The cost of the first batch was measured at K2,500.This was for 500 hours at K5 per hour.• Variable overhead is estimated at K2 per labour hour.• Direct material will be K500 per batch of wimble for the first 200 batches produced. The second 200 batches will cost 90% of the cost per batch of the first 200 batches. All batches from…
Chapter 9 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 9 - Define the term budget. How are budgets used in...Ch. 9 - Prob. 2DQCh. 9 - Explain how both small and large organizations can...Ch. 9 - Prob. 4DQCh. 9 - What is a master budget? An operating budget? A...Ch. 9 - Explain the role of a sales forecast in budgeting....Ch. 9 - All budgets depend on the sales budget. Is this...Ch. 9 - Why is goal congruence important?Ch. 9 - Why is it important for a manager to receive...Ch. 9 - What is participative budgeting? Discuss some of...
Ch. 9 - A budget too easily achieved will lead to...Ch. 9 - Explain why a manager has an incentive to build...Ch. 9 - Discuss the differences between static and...Ch. 9 - Explain why mixed costs must be broken down into...Ch. 9 - What is the purpose of a before-the-fact flexible...Ch. 9 - Prob. 1MCQCh. 9 - Which of the following is part of the control...Ch. 9 - Which of the following is not an advantage of...Ch. 9 - The budget committee a. reviews the budget. b....Ch. 9 - A moving, 12-month budget that is updated monthly...Ch. 9 - Which of the following is not part of the...Ch. 9 - Before a direct materials purchases budget can be...Ch. 9 - The first step in preparing the sales budget is to...Ch. 9 - Which of the following is needed to prepare the...Ch. 9 - A company requires 100 pounds of plastic to meet...Ch. 9 - A company plans to sell 220 units. The selling...Ch. 9 - Select the one budget below that is not an...Ch. 9 - A company has the following collection pattern:...Ch. 9 - The percentage of accounts receivable that is...Ch. 9 - Which of the following is not an advantage of...Ch. 9 - Prob. 16MCQCh. 9 - For performance reporting, it is best to compare...Ch. 9 - To create a meaningful performance report, actual...Ch. 9 - To help assess performance, managers should use a...Ch. 9 - A firm comparing the actual variable costs of...Ch. 9 - Preparing a Sales Budget Patrick Inc. sells...Ch. 9 - Preparing a Production Budget Patrick Inc. makes...Ch. 9 - Preparing a Direct Materials Purchases Budget...Ch. 9 - Preparing a Direct Labor Budget Patrick Inc. makes...Ch. 9 - Preparing an Overhead Budget Patrick Inc. makes...Ch. 9 - Preparing an Ending Finished Goods Inventory...Ch. 9 - Preparing a Cost of Goods Sold Budget Andrews...Ch. 9 - Preparing a Selling and Administrative Expenses...Ch. 9 - Preparing a Budgeted Income Statement Oliver...Ch. 9 - Preparing a Schedule of Cash Collections on...Ch. 9 - Preparing an Accounts Payable Schedule Wight Inc....Ch. 9 - Preparing a Cash Budget La Famiglia Pizzeria...Ch. 9 - Flexible Budget with Different Levels of...Ch. 9 - Performance Report Based on Budgeted and Actual...Ch. 9 - Preparing a Sales Budget Tulum Inc. sells powdered...Ch. 9 - Preparing a Production Budget Tulum Inc. makes a...Ch. 9 - Preparing a Direct Materials Purchases Budget...Ch. 9 - Preparing a Direct Labor Budget Tulum Inc. makes a...Ch. 9 - Preparing an Overhead Budget Tulum Inc. makes a...Ch. 9 - Prob. 40BEBCh. 9 - Preparing a Cost of Goods Sold Budget Lazlo...Ch. 9 - Preparing a Selling and Administrative Expenses...Ch. 9 - Preparing a Budgeted Income Statement Jameson...Ch. 9 - Preparing a Schedule of Cash Collections on...Ch. 9 - Pilsner Inc. purchases raw materials on account...Ch. 9 - Preparing a Cash Budget Olivers Bistro provided...Ch. 9 - Flexible Budget with Different Levels of...Ch. 9 - Performance Report Based on Budgeted and Actual...Ch. 9 - Planning and Control a. Dr. Jones, a dentist,...Ch. 9 - Use the following information for Exercises 9-50...Ch. 9 - Prob. 51ECh. 9 - Production Budget and Direct Materials Purchases...Ch. 9 - Production Budget Aqua-Pro Inc. produces...Ch. 9 - Direct Materials Purchases Budget Langer Company...Ch. 9 - Direct Labor Budget Evans Company produces asphalt...Ch. 9 - Sales Budget Alger Inc. manufactures six models of...Ch. 9 - Production Budget and Direct Materials Purchases...Ch. 9 - Schedule of Cash Collections on Accounts...Ch. 9 - Schedule of Cash Collections on Accounts...Ch. 9 - Cash Payments Schedule Fein Company provided the...Ch. 9 - Cash Budget The owner of a building supply company...Ch. 9 - Flexible Budget for Various Levels of Production...Ch. 9 - Use the following information for Exercises 9-63...Ch. 9 - Use the following information for Exercises 9-63...Ch. 9 - Prob. 65PCh. 9 - Operating Budget, Comprehensive Analysis Allison...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Ryan Richards, controller for Grange Retailers,...Ch. 9 - Participative Budgeting, Not-for-Profit Setting...Ch. 9 - Cash Budget The controller of Feinberg Company is...Ch. 9 - Optima Company is a high-technology organization...Ch. 9 - Direct Materials and Direct Labor Budgets Willison...Ch. 9 - Prob. 75PCh. 9 - Prob. 76CCh. 9 - Prob. 77CCh. 9 - Budgetary Performance, Rewards, Ethical Behavior...
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Similar questions
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