The Houston Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Houston Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $85 and has direct material costs of $55 incurred at the start of the machining operation. Houston has no other variable costs. Houston can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Read the requirements. Requirement 1. Houston is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,350 units. The annual cost of these jigs and tools is $40,000. Should Houston acquire these tools? Show your calculations. Producing 1,350 more units will generate contribution (throughput) margin and operating income because Select the formula, then enter the amounts to calculate the change in throughput contribution. Change in throughput contribution Should Houston acquire these tools? The in throughput contribution margin is the incremental costs by Therefore, Houston implement the new design. Data table Machining Finishing - Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($640,000 160,000; $160,000 160,000) 180,000 units 160,000 units 160,000 units 160,000 units $640,000 $160,000 $4 per unit $1 per unit 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 9,500 units and would cost $22,000 per year. Should Houston implement the change? Show your calculations. Increasing its capacity further increase contribution (throughput) margin. Houston implement the change to increase production. Requirement 3. An outside contractor offers to do the finishing operation for 8,000 units at $3 per unit, triple the $1 per unit that it costs Houston to do the finishing in-house. Should Houston accept the subcontractor's offer? Show your calculations. Select the formula you will use to calculate the change in throughput contribution. Then, enter the amounts in the formula and calculate the change in throughput contribution. Change in throughput contribution Houston contract with an outside contractor to do 8,000 units of finishing at $3 per unit because the in throughput contribution is incremental costs by Requirement 4. The Hasting Corporation offers to machine 6,200 units at $2 per unit, half the $4 per unit that it costs Houston to do the machining in-house. Should Houston accept Hasting's offer? Show your calculations. Operating costs in the Machining Department of $640,000, or $4 per unit, are costs. Houston save any of these costs by subcontracting machining 6,200 units to Hasting. Total costs will be greater by Houston accept Hasting's order. Requirement 5. Houston produces 2,800 defective units at the machining operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units at the machining operation is Because the Machining Department has a capacity of 180,000 units, it produce and transfer the annual production to the Finishing Department. Therefore, there Machining Department. opportunity cost of producing defective units in the Requirement 6. Houston produces 2,800 defective units at the finishing operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units in the Finishing Department is Because the Finishing Department a bottleneck operation, the cost of a defective unit is because of the of contribution margin The Houston Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $85 and has direct material costs of $55 incurred at the start of the machining operation. Houston has no other variable costs. Houston can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Read the requirements. Requirement 1. Houston is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,350 units. The annual cost of these jigs and tools is $40,000. Should Houston acquire these tools? Show your calculations. Producing 1,350 more units will generate contribution (throughput) margin and operating income because Select the formula, then enter the amounts to calculate the change in throughput contribution. Change in throughput contribution Should Houston acquire these tools? The in throughput contribution margin is the incremental costs by Therefore, Houston implement the new design. Data table Machining Finishing - Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($640,000 160,000; $160,000 160,000) 180,000 units 160,000 units 160,000 units 160,000 units $640,000 $160,000 $4 per unit $1 per unit 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 9,500 units and would cost $22,000 per year. Should Houston implement the change? Show your calculations. Increasing its capacity further increase contribution (throughput) margin. Houston implement the change to increase production. Requirement 3. An outside contractor offers to do the finishing operation for 8,000 units at $3 per unit, triple the $1 per unit that it costs Houston to do the finishing in-house. Should Houston accept the subcontractor's offer? Show your calculations. Select the formula you will use to calculate the change in throughput contribution. Then, enter the amounts in the formula and calculate the change in throughput contribution. Change in throughput contribution Houston contract with an outside contractor to do 8,000 units of finishing at $3 per unit because the in throughput contribution is incremental costs by Requirement 4. The Hasting Corporation offers to machine 6,200 units at $2 per unit, half the $4 per unit that it costs Houston to do the machining in-house. Should Houston accept Hasting's offer? Show your calculations. Operating costs in the Machining Department of $640,000, or $4 per unit, are costs. Houston save any of these costs by subcontracting machining 6,200 units to Hasting. Total costs will be greater by Houston accept Hasting's order. Requirement 5. Houston produces 2,800 defective units at the machining operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units at the machining operation is Because the Machining Department has a capacity of 180,000 units, it produce and transfer the annual production to the Finishing Department. Therefore, there Machining Department. opportunity cost of producing defective units in the Requirement 6. Houston produces 2,800 defective units at the finishing operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units in the Finishing Department is Because the Finishing Department a bottleneck operation, the cost of a defective unit is because of the of contribution margin
Expert Answer:
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
Students also viewed these accounting questions
-
Survey of College Math Retirement Planning Project Name Overview: In this project you are going to determine the amount of money needed at retirement and the investment requirements needed to meet...
-
A bond with FV = $ 1 0 0 0 , YTM = 5 % , and annual coupon rate of 1 2 % ( paid semi - annually ) matures on 0 1 / 0 1 / 2 0 2 5 . What is the dirty price of the bond on 0 4 / 0 1 / 2 0 2 4 ?
-
You currently lease land to graze livestock. Your lease is up this year, and the landowner has offered you a 1 5 - year contract to lease the land for $ 5 5 . 2 5 / ac for 1 5 years, with the first...
-
Describe Robertson Tool's business risk, making critical judgments. Consider the volatility of its revenues and operating expenses, therefore appraising the volatility of its EBIT. HINT: Consider the...
-
Refer to the corporate rate schedule in Appendix C. a. What are the tax liability, the marginal tax rate, and the average tax rate for a corporation with $48,300 taxable income? b. What are the tax...
-
Using the data in BE7.9, determine or calculate the cash balance per Southco Limited's books. An examination of the company's July bank statement shows a balance of $19,260 on July 31; outstanding...
-
Which of the following statements is true? a. Cookies were originally intended to facilitate advertising on the Web. b. Cookies always contain encrypted data. c. Cookies are text files and never...
-
On January' 1, Lorain Corporation had 2,000 shares of $5 par common stock LO 15.7 authorized and outstanding. These shares were originally issued at a price of $26 per share. In addition, 500 shares...
-
On January 1, Year 2, Cat Corporation purchased common shares of Mouse Limited for $1,900,000. On this date, the net assets of Mouse had a book value of $5,550,000. At acquisition, the identifiable...
-
In what fiduciary role is the bank responsible for making payments of interest or dividends to the holders of stock or bonds issued by a corporation or government unit?
-
(a) Rank the pairs according to the magnitude of the charge transferred during touching, greatest first. +6e -4e (1) +6e 3>1>2 02>1>3 01=2=3 (1) 0 02>1>3 03>1>2 01=2=3 (2) (b) Rank the pairs...
-
Sunburn Sunscreen has a zero coupon bond issue outstanding with a face value of $14,000 that matures in one year. The current market value of the firm's assets is $15,300. The standard deviation of...
-
Q6 (a) Discuss the continuity of the following function at x=2 x-4 when 0 < x <2 x-2 f(x)=4 when x=2 3x+2 when x> 2 X (b) Find lim 1-0 1+3x-1-3x x
-
Using the link below, http://www.wnyc.org/story/object-anyway/- How does this video (or set of videos) illustrate the concepts covered in the readings? How does this video (or set of videos) portray...
-
Which accounting concept is being violated below: A business owner plans to sell old equipment next year at a profit of $6 000 but he records that amount as profit in this year's income statement....
-
Rosen is the life tenant of five hundred acres of land, on which is situated a previously existing mine. Rosen has the right to a . use the land, including the mine, for any purpose, without...
-
Consider the function f and its graph. a. Estimate the zeros of the area function b. Estimate the points (if any) at which A has a local maximum or minimum. c. Sketch a graph of A, for 0 x 10,...
-
Is Russia experiencing a net capital inflow? Use the following balance of payments data for Russia (Russian Federation) from the IMF to answer this problem. Assumptions (million US$) 2000 2001 2002...
-
What is Russias total for Groups A and B? Use the following balance of payments data for Russia (Russian Federation) from the IMF to answer this problem. Assumptions (million US$) 2000 2001 2002 2003...
-
What is Russias total for Groups A through C? Use the following balance of payments data for Russia (Russian Federation) from the IMF to answer this problem. Assumptions (million US$) 2000 2001 2002...
Study smarter with the SolutionInn App