Epson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $5.20...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Epson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $5.20 each. Total fixed costs per year are $820,800. Variable cost per unit are $1.85 for direct materials, $0.10 for direct labor, $0.30 for factory overhead, and $0.05 for distribution. The variable distribution costs are for transportation to mail-order distributors. Also assume the current annual production and sales volume is 432,000 and annual capacity is 528,000 units. REQUIRED Determine the effect of the following situation on annual profits. A Guatemalan manufacturer has offered a one-year contract to supply ink for the cartridges (including shipping costs) at a cost of $1.25 per unit. If Epson accepts the offer, it will be able to reduce variable manufacturing costs by 50% and rent some of its factory space to another company for $2,640 per month for 12 months. Note: enter all numbers as positive numbers, do NOT use a negative sign. Profits would decrease by $ 0 *If Epson accepted Guatemalan manufacturing offer. Should Epson accept Guatemalan manufacturing offering?: No Epson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $5.20 each. Total fixed costs per year are $820,800. Variable cost per unit are $1.85 for direct materials, $0.10 for direct labor, $0.30 for factory overhead, and $0.05 for distribution. The variable distribution costs are for transportation to mail-order distributors. Also assume the current annual production and sales volume is 432,000 and annual capacity is 528,000 units. REQUIRED Determine the effect of the following situation on annual profits. A Guatemalan manufacturer has offered a one-year contract to supply ink for the cartridges (including shipping costs) at a cost of $1.25 per unit. If Epson accepts the offer, it will be able to reduce variable manufacturing costs by 50% and rent some of its factory space to another company for $2,640 per month for 12 months. Note: enter all numbers as positive numbers, do NOT use a negative sign. Profits would decrease by $ 0 *If Epson accepted Guatemalan manufacturing offer. Should Epson accept Guatemalan manufacturing offering?: No
Expert Answer:
Answer rating: 100% (QA)
To determine the effect of the Guatemalan manufacturing offer on annual profits we need to calculate the changes in costs and revenues 1 Changes in Co... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
Posted Date:
Students also viewed these accounting questions
-
Information technology can create sustainable competitive advantage if it creates value, is difficult for competitors to obtain, and _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _...
-
Write a cron table entry that will run the command /usr/bin/backupVM.py at 11:30PM every night from January through April.
-
Part 6: Research Question 2 on Need and Referral Source What, if any, is the relationship between presenting need of case and the referral source (labeled "How Did You Hear About Taller de Jose)? CC...
-
A Monica who is aged 54, is employed as a Senior Manager with Abacus, a large accounting firm based in Sydney. During the 2020 tax year Abacus contributed $20,000 into QRest Super, which Monica...
-
Using the information in Problem 8B, prepare an income statement and a statement of changes in equity for the year ended December 31, 2014, and a classified balance sheet at December 31, 2014. The...
-
Beck Corporation has one issue of preferred stock and one issue of common stock outstanding. Given Becks stockholders equity account that follows, determine the original price per share at which the...
-
Discuss the potential advantages and disadvantages that countries outside the United States should consider before adopting regulations, such as those in the Sarbanes-Oxley Act, that increase...
-
American International Automotive Industries (AIAI) manufactures engine, transmission, and chassis parts for manufacturers and repair companies in the United States, South America, Canada, Mexico,...
-
You are choosing between two projects. The cash flows for the projects are given in the following table ($million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A -$50 $23 $19 $18 $17 B -$100 $19 $40...
-
On May 1, Vaya Corp. had a beginning cash balance of $164. Vaya's sales for April were $540, and May sales were $599. During May, the firm had cash expenses of $95 and made payments on accounts...
-
Sunflower Products has debt outstanding that has a market value of $211 million. The company's preferred stock has a market value of $125 million and the company's common stock has a market value of...
-
== A bar of aluminum (bar A) is in thermal contact with a bar of copper (bar B) of the same length and area (see the figure below). One end of the compound bar is maintained at T = 78.5C, and the...
-
2. The door to a castle is 3 m high by 2 m wide, with a mass of 100 kg. It has an iron door knob with mass 10 kg, 1.75 m from the hinge. The door is closed, but you pull on the doorknob with 100N of...
-
1) You have prepared pigeon breast with spinach and bacon. The head chef gives feedback that the texture of the dish is not good. How would you improve it? Answer in about 20 40 words. 2) How would...
-
PART B: Additional information was available after the Financial Statements in Part A were completed. Critically analyze, the effect of each of the following items separately on the affected...
-
?Futures Price, F 0,T = S 0 ? (1 + r f + c - d) T where S 0 = spot price now r f = risk free rate c = carry cost d = convenience yield T = time to delivery date . 5. ('IU marks) Today is 15 Apr...
-
I frequently use NY Times and CNN and am aware of Fox News but I never use it. I visit these sites, NY Times and CNN, a few times a week whenever I have to research something or see something on...
-
Discuss the difference between a modified audit report and an unmodified audit report.
-
What can impair the objectivity of an audit?
-
What should be included in an engagement letter? What are some reasons a client might change the terms of the engagement? What are the two basic types of engagement proposals?
Study smarter with the SolutionInn App