Question
Gallerani Corporation has received a request for a special order of 5,400 units of product A90 for $28.40 each. Product A90's unit product cost is
Gallerani Corporation has received a request for a special order of 5,400 units of product A90 for $28.40 each. Product A90's unit product cost is $27.85, determined as follows:
| Direct materials | $ | 3.30 | |
| Direct labor | 8.60 | ||
| Variable manufacturing overhead | 7.70 | ||
| Fixed manufacturing overhead | 8.25 | ||
| Unit product cost | $ | 27.85 | |
Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $4.70 per unit and that would require an investment of $14,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:
Multiple Choice
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$(36,410)
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$8,140
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$2,970
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$(98,550)
Bruce Corporation makes four products in a single facility. These products have the following unit product costs:
| Products | ||||||||
| A | B | C | D | |||||
| Direct materials | $ | 13.70 | $ | 9.60 | $ | 10.40 | $ | 10.00 |
| Direct labor | 18.80 | 26.80 | 33.00 | 39.80 | ||||
| Variable manufacturing overhead | 3.70 | 2.10 | 2.00 | 2.60 | ||||
| Fixed manufacturing overhead | 25.90 | 34.20 | 26.00 | 36.60 | ||||
| Unit product cost | $ | 62.10 | $ | 72.70 | $ | 71.40 | $ | 89.00 |
Additional data concerning these products are listed below.
| Products | ||||||||
| A | B | C | D | |||||
| Grinding minutes per unit | 3.20 | 4.40 | 3.70 | 2.80 | ||||
| Selling price per unit | $ | 75.50 | $ | 92.90 | $ | 86.80 | $ | 103.60 |
| Variable selling cost per unit | $ | 1.60 | $ | 0.60 | $ | 2.70 | $ | 1.00 |
| Monthly demand in units | 3,400 | 3,400 | 2,400 | 2,600 | ||||
The grinding machines are potentially the constraint in the production facility. A total of 53,100 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
How many minutes of grinding machine time would be required to satisfy demand for all four products?
Multiple Choice
-
42,000
-
53,100
-
31,120
-
8,980
Bruce Corporation makes four products in a single facility. These products have the following unit product costs:
| Products | ||||||||
| A | B | C | D | |||||
| Direct materials | $ | 15.90 | $ | 19.80 | $ | 12.80 | $ | 15.50 |
| Direct labor | 17.90 | 21.30 | 15.70 | 9.70 | ||||
| Variable manufacturing overhead | 4.70 | 5.90 | 8.40 | 5.40 | ||||
| Fixed manufacturing overhead | 27.80 | 14.70 | 14.80 | 16.80 | ||||
| Unit product cost | 66.30 | 61.70 | 51.70 | 47.40 | ||||
Additional data concerning these products are listed below.
| Products | ||||||||
| A | B | C | D | |||||
| Grinding minutes per unit | 2.15 | 1.25 | 0.85 | 0.45 | ||||
| Selling price per unit | $ | 80.20 | $ | 72.60 | $ | 69.40 | $ | 64.10 |
| Variable selling cost per unit | $ | 2.90 | $ | 3.40 | $ | 3.10 | $ | 3.80 |
| Monthly demand in units | 3,300 | 2,300 | 2,300 | 4,300 | ||||
The grinding machines are potentially the constraint in the production facility. A total of 10,500 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Which product makes the MOST profitable use of the grinding machines? (Round your intermediate calculations to 2 decimal places.)
Multiple Choice
-
Product B
-
Product A
-
Product C
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Product D
Bruce Corporation makes four products in a single facility. These products have the following unit product costs:
| Products | ||||||||
| A | B | C | D | |||||
| Direct materials | $ | 15.30 | $ | 11.20 | $ | 12.00 | $ | 11.60 |
| Direct labor | 20.40 | 28.40 | 34.60 | 41.40 | ||||
| Variable manufacturing overhead | 5.30 | 3.70 | 3.60 | 4.20 | ||||
| Fixed manufacturing overhead | 27.50 | 35.80 | 27.60 | 38.20 | ||||
| Unit product cost | 68.50 | 79.10 | 77.80 | 95.40 | ||||
Additional data concerning these products are listed below.
| Products | ||||||||
| A | B | C | D | |||||
| Grinding minutes per unit | 4.80 | 6.30 | 5.30 | 4.40 | ||||
| Selling price per unit | $ | 77.10 | $ | 94.50 | $ | 88.40 | $ | 105.20 |
| Variable selling cost per unit | $ | 3.20 | $ | 2.20 | $ | 4.30 | $ | 2.60 |
| Monthly demand in units | 5,000 | 5,000 | 4,000 | 3,000 | ||||
The grinding machines are potentially the constraint in the production facility. A total of 89,600 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Up to how much should the company be willing to pay for one additional minute of grinding machine time if the company has made the best use of the existing grinding machine capacity? (Round your intermediate calculations to 2 decimal places.) 1_04_2014_QC_58425, 11_17_2014_QC_58425,Garrison 16e Rechecks 2017-09-13
Multiple Choice
-
$10.32
-
$3.20
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$6.40
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$8.85
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