nts Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665610e020de2_448665610e019f6f.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665610e05f28a_448665610e05aaf8.jpg)
Transcribed Image Text:
nts Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven's president has decided to introduce only one of the new products for this coming winter. If the product is a success, further expansion in future years will be initiated. The product selected (called Chap-Off) is a lip balm that will be sold in a lipstick-type tube. The product will be sold to wholesalers in boxes of 24 tubes for $11 per box. Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to produce the product. However, a $99,000 charge for fixed manufacturing overhead will be absorbed by the product under the company's absorption costing system. Using the estimated sales and production of 110,000 boxes of Chap-Off, the Accounting Department has developed the following manufacturing cost per box: Direct material Direct labor Manufacturing overhead Total cost $5.10 3.40 2.30 5 10.00 The costs above relate to making both the lip balm and the tube that contains it. As an alternative to making the tubes for Chap-Off, Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $1.70 per box of 24 tubes. If Silven Industries stops making the tubes and buys them from the outside supplier, its direct labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by 10% and its direct materials costs would be reduced by 20%. nts Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven's president has decided to introduce only one of the new products for this coming winter. If the product is a success, further expansion in future years will be initiated. The product selected (called Chap-Off) is a lip balm that will be sold in a lipstick-type tube. The product will be sold to wholesalers in boxes of 24 tubes for $11 per box. Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to produce the product. However, a $99,000 charge for fixed manufacturing overhead will be absorbed by the product under the company's absorption costing system. Using the estimated sales and production of 110,000 boxes of Chap-Off, the Accounting Department has developed the following manufacturing cost per box: Direct material Direct labor Manufacturing overhead Total cost $5.10 3.40 2.30 5 10.00 The costs above relate to making both the lip balm and the tube that contains it. As an alternative to making the tubes for Chap-Off, Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $1.70 per box of 24 tubes. If Silven Industries stops making the tubes and buys them from the outside supplier, its direct labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by 10% and its direct materials costs would be reduced by 20%.
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Why is internally generated cash flow of such importance to Merck? Cant Merck use the financial markets as a source of funds?
-
Why is almost all life on Earth dependent either directly or indirectly on photosynthesis?
-
Since decision making is personalized, do you think bias plays an important role for a CEO or a first-line manager in a developing country? Explain the potential daily bias that managers may...
-
Darnell Poston, owner of Poston Manufacturing, Inc., wants to determine the cost behavior of labor and overhead. Darnell pays his workers a salary; during busy times, everyone works to get the orders...
-
I appreciate your help We've seen that if consumers are identical, then a rm using two-part pricing with access fee F and per-unit price p generally nds it prot-maximizing to set the socially efcient...
-
8: What would happen if someone ran this as a paired t-test, but set the alternatives as two-sided instead of one-sided? Question 8 options: They would get a p-value of > 0.05, and would conclude the...
-
12 1 2 The system temperature starts at 325F and decreases thru number 4 to 142F after the air makes its way to number 3 the air increases to 260F to number 6 as the air passes thru the air decreases...
-
Transaction 7: CGWO pays salaries and benefits for the year (assume all amounts are paid in cash). The following table presents the allocation of the costs to the various programs, management and...
-
Leather Saddle Company has a standard cost system and has set the following standards for materials and labour: Leather (10 strips @ $25 per strip) $250 Direct labour (15 hours @ $20 per hour) 300...
-
Explain the difference between Foreign Currency Transactions and Translations. Provide examples of each.
-
1. A bar with a diameter of 2.5 cm is subjected to a tensile load of 55 kN. What stress is generated in the bar? 2. The stress that a 1.75 cm diameter bar is subjected to is 361.7 kPa. What load has...
-
The expectation that employees perform a job, take corrective action when necessary and report upward on the status and quality of their performance is called: a) Responsibility b) Accountability c) A
-
Suppose that a random variable X is normally distributed with an expected value of 2,000 and a standard deviation of 800. lo56 What is the probability of the random variable X realizing a value...
-
The Langley Toy Company is considering the introduction of a new toy. The demand for the new toy is estimated to be normally distributed with an expected value of 40,000 units and a standard...
-
The VYZ Corporation is considering two investment projects that have the following characteristics: lop85 PROJECT 1 PROJECT 2 Probability NPV Probability NPV 10 $1,500 .15 $1,500 25 2,000 .20 2,000...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App