Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help! Express Delivery Company (EDC) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $220,600. An internally

Please help!
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Express Delivery Company (EDC) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $220,600. An internally prepared report summarizes the Payroll Department's annual operating costs as follows: EDC currently rents overflow office space for $36,600 per year, If the compony closes its Payroll Department, the employees occupying the tented office space could be brought in house and the lease agreement on the rented space could be terminated with no penalty. If the Payroll Department is outsourced the payroll clerks will not be retained; however, the supervisor would be transferred to the company's Human Resource Management Department. As a result of this transfer, the company would discontinue its efforts to hire a new Human Resource Manager that it expected to pay an annual salary of $56,600. The Payroll Department's equipment would be transferred to other departments within the company to replace outdated equipment that would be recycled for zero salvage value. Required: Required: What is the financlat advantage (disadvantage) of outsourcing the Payroll Department? Barlow Company manufactures three products-A. B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: The same raw material is used in all three products. Barlow Company has only 6,000 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $8 per pound. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Assuming that Bariow has unlimited demand for each of its three products, what is the maximum contribution margin the company can earn when using the 6,000 pounds of raw material on hand? 3. Assuming that Barlow's estimated customer demand is 500 units per product line, what is the maximum contribution margin the company can earn when using the 6,000 pounds of raw material on hand? 4. A forelgn supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. Assuming Barlow's estimated customer demand is 500 units per product line and that the company has used its 6,000 pounds of raw material in an optimal fashion, what is the highest price Barlow Company should be willing to pay for an additional pound of materiais? Complete this question by entering your answers in the tabs below. Calculate the contribution margin per pound of the constraining resource for each product. Deita Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activitylevel of 106,800 units per year is: The normal selling price is $19.00 per unit. The company's capacity is 124,800 units per year. An order has been received from a mailorder house for 1,500 units at a special price of $16.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for these units? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of accepting the speclai order? Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $355,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Each product can be processed further after the split-off point Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-olf point? 2. Based on your analysis in requirement 1 , which product or products should be sold at the split-off point and which product or products should be processed further? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Enter "disadvantages" as a negative value.) Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors - home nursing, Meals On Wheets, and housekeeping Date on revenue and expenses for the past year follow: "Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services. Judith Miyama, considers last year's net operating income of $40,600 to be unsatisfoctory, therefore, she is considering the possibility of discontinuing the housekeeping program. The depreciation in housekeeping is for a small von that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the var would be donated to a charitable organization, None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the procram administrator would be avoided. Required: 1.a. What is the financial advontage (disadvantage) of discontinuing the Housekeeping program? 1.b. Should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement. 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the varlous services? Complete this question by entering your answers in the tabs below. What is the financial advantage (dasadvantage) of discontinuing the Housekeeping progrem

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Cost Accounting

Authors: Don R. Hansen, Maryanne Mowen, Liming Guan, Mowen/Hansen

1st International Edition

0538749636, 978-0538749633

More Books

Students also viewed these Accounting questions

Question

7. Identify the road of trials in The Lion King.

Answered: 1 week ago