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:
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Plant Capacity
11,000 Windows
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that existing customers should get the benefit of these lower costs. Should Reward Plus accept the special order under
these conditions? Show your calculations.
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(8) | operating income. |
8/3/2021 6-1 MyAccountingLab Homework: Chapter 11-Amanda Scarcello
Variable costs that vary with number of units produced
$ | ||
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Variable costs (for setups, materials handling, quality control, and so on)
2: More Info
3: Requirements
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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 $10 in the month in which the special
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Costs of CMCB | Cost per Unit | |
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4/25 |
Choices for Sunshine
Make CMCBs | Buy CMCBs | Buy CMCBs | |
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and Do Not | and Do Not | and Make | |
Make CB3s | Make CB3s | CB3s |
Excess of future costs over future
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$ | 160 | 195 | ||
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39 | 35 |
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810,000 | 400,000 |
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following incremental revenues and costs from CB3s:
Total expected incremental future revenues $2,400,000
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3. |
$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.
be recorded in the accounting system, due to (5) | transaction |
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Requirement 3. Should Best Trim purchase 276,000 units at the start of the year or 23,000 units each month? Show your
calculations.
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6-1 MyAccountingLab Homework: Chapter 11-Amanda Scarcello |
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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 | |||||||||||||||||||
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8/25 |
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Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin
Model 9 | Model 14 | ||
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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.
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9/25 |
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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
(8) | ||
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Change in throughput |
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11/25 |
Boston to do the machining in-house. Should Boston accept Heaton 's offer? Show your calculations.
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save any of these costs by subcontracting machining 6,000 units to Heaton. Total costs will be greater by | . |
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defective items produced? Explain your answer briefly.
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(23) | of (25) | contribution margin. |
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12/25 |
1. |
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6-1 MyAccountingLab Homework: Chapter 11-Amanda Scarcello | |||||
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6. | Printers operates a printing press with a monthly capacity of 3,000 | ||||
customers: Scott | |||||
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Scott Corporation | |||||
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of Leanne is (3) |
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Corporation | |||||
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.
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then Arlington does not need to be concerned about turning down the business of the other
14/25 |
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.
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contribution margin | ![]() |
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contribution margin per machine-hour | ![]() |
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operating income | ![]() |
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revenue | ||||||||||||||||
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contribution margin | ![]() |
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contribution margin per machine-hour | ![]() |
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operating income | ![]() |
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Leanne | (7) | ![]() |
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Fixed costs | ||||||||||||||||
15/25 |
7. |
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.)
Keep old oven |
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Total | |||
Based on the calculations above, Angelo's Bakery (26) |
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
price of |
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29,000 | 47,000 | |||
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7 years | 5 years | ||||
2 years | 0 years | ||||
5 years | 5 years | ||||
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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 | ||||||||||||||||
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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.
8. |
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.
Replace | ≤ | Upgrade | |
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≤ | ||
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The maximum one-time equipment cost that TechAide will be willing to pay to replace the old equipment rather than
upgrade it is |
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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.)
6-1 MyAccountingLab Homework: Chapter 11-Amanda Scarcello |
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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.)
Upgrade | ||
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17: Data Table
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22/25 | |||||||||||||
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9. |
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.
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Requirement 3. What are some of the qualitative factors that Riverside Tools Corp should consider when deciding whether
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19: Data Table
$ | 690,000 | |
---|---|---|
9 | ||
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$ | 28,600 | |
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Incremental annual fixed manufacturing costs associated with the new product line | 350,000 | |
$ |
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310,000 |
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?
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