Riverside tools corp believes that the

Requirement 1. Should Reward Plus accept this special order? Show your calculations.

Begin by completing an analysis, and start by showing the computation of the company's operating income without the

Variable costs:

Plant Capacity

11,000 Windows

that existing customers should get the benefit of these lower costs. Should Reward Plus accept the special order under

these conditions? Show your calculations.

8/3/2021 6-1 MyAccountingLab Homework: Chapter 11-Amanda Scarcello

Variable costs that vary with number of units produced

Variable costs (for setups, materials handling, quality control, and so on)

2: More Info

3: Requirements

3. As in requirement 1, assume that monthly capacity is 12,000 windows. Reward Plus is concerned that if it accepts the

special order, its existing customers will immediately demand a price discount of $10 in the month in which the special

Choices for Sunshine

Excess of future costs over future

following incremental revenues and costs from CB3s:

Total expected incremental future revenues $2,400,000

$10.00 price will be given. Best Trim can invest its cash at 10 % per year. It costs Best Trim $210 to place each purchase

order.

Let's begin the calculation for the opportunity cost of interest forgone by first determining the formula, then calculate the

opportunity cost.

Requirement 3. Should Best Trim purchase 276,000 units at the start of the year or 23,000 units each month? Show your

calculations.

Requirement 4. What other factors should Best Trim consider when making its decision?

1.	What is the opportunity cost of interest forgone from purchasing all 276,000														units at the start of the year instead of in
12 monthly purchases of 23,000 units per order?
2.	Would this opportunity cost be recorded in the accounting system? Why?
3.
4.
(1)
Difference in average investment Units purchased per month
(2)		Investment percentage										(3)					96%		(4)
																					would not
Discounted price per unit
(5)			(6)						not preferred
		no actual
(7)
(8)					(9)					Alternative A would be preferred even more.
		Alternative B
											8/25

Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin

		Model 9	Model 14
-
	(2)
=	Contribution margin per unit
÷
=

B. Both Model 9 and Model 14 since both models provide positive contribution margins.

C. Model 14 , since this model results in the higher contribution margin per unit.

annual finishing output by 1,200 units. The annual cost of these jigs and tools is $25,000 . Should Boston acquire these

Select the formula, then enter the amounts to calculate the change in throughput contribution.

Requirement 2. The production manager of the Machining Department has submitted a proposal to do faster setups that

would increase the annual capacity of the Machining Department by 13,500 units and would cost $28,000 per year. Should

Boston to do the machining in-house. Should Boston accept Heaton 's offer? Show your calculations.

defective items produced? Explain your answer briefly.

Now calculate the operating income using the allocation you determined above.

whether it should accept one company's business at the cost of the other.

B.

E.

then Arlington does not need to be concerned about turning down the business of the other

that in January. Arlington can choose to accept as much of the Scott and Leanne business for February as its capacity

allows. Assume that total machine-hours and fixed costs for February will be the same as in January.

Arlington
(1)		Revenue
												Revenue per machine-hour
Contribution margin										Variable cost
Operating income
(2)		contribution margin													(3)
		contribution margin per machine-hour															less
		operating income											variable cost per machine-hour
		revenue
(4)		contribution margin													(5)
		contribution margin per machine-hour
		operating income											variable cost per machine-hour
		revenue
(6)		Leanne	(7)										Revenue per machine-hour
		Scott				Contribution margin							Variable cost per machine-hour
						Contribution margin per machine-hour
						Fixed costs
													15/25

related to the old and new ovens follows:
15 (Click the icon to view the information related to the old and new ovens.)

Begin by selecting the relevant items and then entering the appropriate cost in each respective column. Be sure to total the relevant costs. (If an input field is not used in the table, leave the input field empty; do not enter a zero. Use a minus sign or parentheses for any costs.)

Requirement 5. At what purchase price would Angelo's Bakery be indifferent between purchasing the new oven and continuing to use the old oven?

Angelo's Bakery would be indifferent between purchasing the new oven and keeping the old oven at a purchase

2. What information is irrelevant? Why is it irrelevant?

3. Should Angelo's Bakery purchase the new oven? Provide support for your answer.

(21) (23)	6-1 MyAccountingLab Homework: Chapter 11-Amanda Scarcello
		(18)							(19)					(20)
								Don't differ	Irrelevant					Irrelevant
									Relevant					Relevant
									Not applicable					Not applicable
	Don't differ		(22)				Accumulated depreciation
														Original cost (purchase price)
							Current disposal value (market value)
										Operating cost for 5 years
	Book value
										Installation cost
	Accumulated depreciation
										Terminal disposal value
														(26)
																	should not
	Book value

If bonuses are paid on cost control, managers will look for cost savings options, without regard to capital

This might reflect badly on him for purchasing the oven 2 years ago, when the new oven is available just 2

years later.

outlays year-after-year.

The higher annual operating costs of the new oven suggest the original purchase was a good choice.

This reflects well on the manager, as it shows he is always willing to look for cost-savings.

disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $500,000 .

However, the emergence of a new molding technology has led TechAide to consider either upgrading or replacing the

Determine the total relevant costs over 3 years. (If an input field is not used in the table, leave the input field empty; do not

enter a zero. Use parentheses or a minus sign for numbers to be subtracted.)

Requirement 2. Now suppose the one-time equipment cost to replace the production equipment is somewhat negotiable.

The maximum one-time equipment cost that TechAide will be willing to pay to replace the old equipment rather than

First determine the equation you will use to calculate the quantity TechAide would use to base its decisions. Then select the

amounts that will be used in the equation. (Round to the nearest whole number when solving for y.)

Requirement 4. Assume that all data are as given in the original exercise. Dan Doria is TechAide 's manager, and his bonus is based on operating income. Because he is likely to relocate after about a year, his current bonus is his primary concern. Which alternative would Doria choose? Explain.

Begin by calculating the operating income under each alternative. (If an input field is not used in the table, leave the input field empty; do not enter a zero. Round all amounts to the nearest whole number.)

17: Data Table

						6-1 MyAccountingLab Homework: Chapter 11-Amanda Scarcello								22/25
(1)
Cash operating costs
(2)	Cash operating costs					One-time capital costs
(3)						One-time capital costs				(4)			replace
Cash operating costs
(5)						(6)
Cash Operating Costs + X						Cash Operating Costs + X
Total Relevant Costs						Total Relevant Costs
(7)								(8)
$1,728,000 - $500,000 + X						$5,928,000
$3,168,000 - $500,000 + X
$1,728,000 + X
(9)
(Var. mfg cost per desk × y) - Disposal price
(10)
(Var. mfg cost per desk × y) - Disposal price - One-time equip. cost (Var. mfg cost per desk × y) - Disposal price + One-time equip. cost
(11)
$165 y - $500,000 $165 y + $500,000

collection of tools for professional use rather than consumer use. Management needs to make a good decision about

whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a

them from the supplier in Taiwan? Explain.

than the relevant costs to manufacture the garden tools in Maryland.

Requirement 3. What are some of the qualitative factors that Riverside Tools Corp should consider when deciding whether

19: Data Table

the supplier in Taiwan? Explain.

2. Riverside Tools Corp believes that the U.S. dollar may weaken in the coming months against the New Taiwanese

outsource the garden tools manufacturing to Taiwan?

(1)		(2)		(3)		(4)		25/25
should
should not				more		should
(5)
Employee reliability and morale in the Taiwanese facility Fluctuations in the value of the NTD relative to the U.S. dollar
(6)
Delivery lead times Employee reliability and morale in the Taiwanese facility
(7)
Book value of the existing equipment and estimated replacements Delivery lead times
(8)
Book value of the existing equipment and estimated replacements Quality https://xlitemprod.pearsoncmg.com/api/v1/print/highered