[Solved] Question 1 Stein Mart company INC is cons

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 16, 2024

Question 1 Stein Mart company INC is considering a special order for 1,000 units to be priced at $8.90 (the normal price would be $11.50).

Question 1

Stein Mart company INC is considering a special order for 1,000 units to be priced at $8.90 (the normal price would be $11.50). The order would require specialized materials costing $4.00 per unit. Direct labor and variable factory overhead would cost $2.15 per unit. Fixed factory overhead is $1.20 per unit. However, the company has excess capacity and acceptance of the order would not raise total fixed factory overhead. The warehouse, however, would have to add capacity costing $1,300. Which of the following is relevant to the special order?

Answer

		$11.50 normal selling price
		$1.20 fixed factory overhead per unit
		$7.35 spent on donuts and coffee
		$8.90 selling price per unit of special order
		none of these

Question 2

Figure 12-1. Stein Company makes carpets. A customer wants to place a special order for 1,000 carpets in navy blue with the company logo woven in the middle, to be priced at $30 each. Normally, Stein would charge $60 per carpet for this type of order. Stein figures that yarn and backing will cost $12 per carpet, variable overhead (machining, electricity) is $5 per carpet, direct labor is $10 per carpet, and one setup will be required at $800 per setup. The set-up charge costs are 100% labor. Currently, the workers needed to set up for and make the carpets are working at Stein. Their wages will be paid whether or not the special order is accepted. Steins policy is to avoid layoffs to the extent possible.

Refer to Figure 12-1. Which costs of the special order relate to flexible resources?

Answer

		yarn and backing
		yarn, backing and variable overhead
		depreciation on machinery
		yarn, backing, and direct labor
		yarn, backing, direct labor, and setup labor

Question 3

Refer to Figure 12-1. Which of the following is a qualitative factor that Stein would consider in making the decision to accept or reject the special order?

Answer

		cost of yarn and backing
		cost of setup labor
		the no-layoff policy
		the use of machinery
		the machining and electricity

Question 4

Refer to Figure 12-1. Which of the following is irrelevant to the special order decision?

Answer

		cost of yarn and backing
		direct labor cost
		machining and electricity cost
		$30 price
		all of these are relevant

Question 5

Refer to Figure 12-1. If Stein accepts the special order, by how much will operating income increase or decrease?

Answer

		$13,000 increase
		$13,000 decrease
		$3,000 increase
		$3,000 decrease
		there will be no effect on operating income

Question 6

Figure 12-3. Elegance Bath Products, Inc. (EBP), a subsidary of Stein company makes a variety of ceramic sinks and tubs. EBP has just developed a line of sinks and tubs made from a mixture of glass and ceramic. The sinks sell for $150 each and have variable costs of $80. The tubs sell for $600 and have variable cost of $450. The glass and ceramic sinks and tubs require the use of specialized molding equipment. The specialized molding equipment has 4,050 hours of capacity per year. A sink uses an average of 2 hours of specialized molding equipment time; a tub uses an average of 5 hours of specialized molding equipment time.

Refer to Figure 12-3. What is the contribution margin per hour of specialized molding equipment time for sinks?

Answer

		$35.00
		$33.33
		$70.00
		$200.00
		$68.33

Question 7

Figure 12-3. Elegance Bath Products, Inc. (EBP) makes a variety of ceramic sinks and tubs. EBP has just developed a line of sinks and tubs made from a mixture of glass and ceramic. The sinks sell for $150 each and have variable costs of $80. The tubs sell for $600 and have variable cost of $450. The glass and ceramic sinks and tubs require the use of specialized molding equipment. The specialized molding equipment has 4,050 hours of capacity per year. A sink uses an average of 2 hours of specialized molding equipment time; a tub uses an average of 5 hours of specialized molding equipment time.

Refer to Figure 12-3. Assume that EBP can sell as many as 1,000 sinks and 500 tubs per year. How many tubs should EBP produce?

Answer

		1,000
		500
		410
		675
		zero

Question 8

Refer to Figure 12-3. What is the contribution margin per hour of specialized molding time for tubs?

Answer

		$35.00
		$30.00
		$70.00
		$200.00
		$68.33

Question 9

Refer to Figure 12-3. Assuming that specialized molding equipment time is the only constrained resource, and that EBP can sell as many tubs and sinks as it can produce, how many sinks should be sold?

Answer

		2,050
		2,025
		zero
		4,050
		810

Question 10

Parron Company a subsidary of Stein company sets price equal to cost plus 60%. Recently, Parron charged a customer a price of $42 for an item. What was the cost of the item to Parron?

Answer

		$26.25
		$42
		$25.20
		$67.20
		$40.32

Question 11

Brorsen, Inc.,a susidary of Stein company has just designed a new product with a target cost of $64. Brorsen requires new product to have a profit of 20%. What is the target price for the new product?

Answer