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- Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.Lander Parts, Inc., produces various automobile parts. In one plant, Lander has a manufacturing cell with the theoretical capability to produce 450,000 fuel pumps per quarter. The conversion cost per quarter is 9,000,000. There are 150,000 production hours available within the cell per quarter. Required: 1. Compute the theoretical velocity (per hour) and the theoretical cycle time (minutes per unit produced). 2. Compute the ideal amount of conversion cost that will be assigned per subassembly. 3. Suppose the actual time required to produce a fuel pump is 40 minutes. Compute the amount of conversion cost actually assigned to each unit produced. What happens to product cost if the time to produce a unit is decreased to 25 minutes? How can a firm encourage managers to reduce cycle time? Finally, discuss how this approach to assigning conversion cost can improve delivery time. 4. Assuming the actual time to produce one fuel pump is 40 minutes, calculate MCE. How much non-value-added time is being used? How much is it costing per unit? 5. Cycle time, velocity, MCE, conversion cost per unit (theoretical conversion rate actual conversion time), and non-value-added costs are all measures of performance for the cell process. Discuss the incentives provided by these measures.Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins of 300 and 600, respectively. Assume initially that Patz can sell all that is produced of either component. Part A requires two hours of assembly, and B requires five hours of assembly. The firm has 300 assembly hours per week. Required: 1. Express the objective of maximizing the total contribution margin subject to the assembly-hour constraint. 2. Identify the optimal amount that should be produced of each machine part and the total contribution margin associated with this mix. 3. What if market conditions are such that Patz can sell at most 75 units of Part A and 60 units of Part B? Express the objective function with its associated constraints for this case and identify the optimal mix and its associated total contribution margin.
- Cairney, Incorporated manufactures a specialized part used in internal combustion engines. The annual demand for the part is 265,000 units. The facility has a practical capacity of 280,000 units annually. The company leased the current facility because facilities capable of manufacturing the unit require machines that can produce 70,000 units each. The annual cost of the facility is $1,120,000. The variable cost of a part is $4. Required: a. What cost per unit should the cost system report to facilitate management decision making? Note: Round your answer to 2 decimal places. b. What is the cost of excess capacity? a. Cost per unit b. Cost of excess capacityAdams Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $5,900 6,200 3,500 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Adams for $2.60 each. Required X Answer is complete but not entirely correct. $ 19,300 Yes $ 24,180 X No 11,100 26,900 a. Calculate the total relevant cost. Should Adams continue to make the containers? b. Adams could lease the space it currently uses in the manufacturing process. If leasing would produce $11,800 per month, calculate the total avoidable costs. Should Adams continue to make the containers? a. Total relevant cost a. Should Adams continue to make the containers? b. Total avoidable cost b. Should Adams continue to make the containers?Wilma Company must decide whether to make or buy some of its components. The costs of producing 64,400 switches for its generators are as follows. Direct materials $29,200 Variable overhead $45,600 Direct labor $31,404 Fixed overhead $81,200 Instead of making the switches at an average cost of $2.91 ($187,404 ÷ 64,400), the company has an opportunity to buy the switches at $2.67 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. (a) Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Make Buy Increase (Decrease) Direct materials $4 $4 $ Direct labor Variable manufacturing costs Fixed manufacturing costs Purchase price Total cost $4 $1 Wilma Company will incur $ of additional costs if it the switches.
- Blossom Company must decide whether to make or buy some of its components. The costs of producing 62,600 switches for its generators are as follows. Direct materials $29,800 Direct labor $29,940 Variable overhead Fixed overhead Instead of making the switches at an average cost of $2.90 ($181,540 ÷ 62,600), the company has an opportunity to buy the switches at $2.74 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. (a) Direct materials Direct labor Variable manufacturing costs Fixed manufacturing costs Purchase price Total cost $45,400 $76,400 Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Senter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Senter a total amount Make…Charge Company manufactures a part for its production cycle. The annual costs per unit for 5,000 units of the part are given below. The fixed factory overhead costs are unavoidable. Another company has offered to sell 5,000 units of the same part to Charge Company for $15 per unit. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. Charge Company should Per Unit Direct materials $3.00 Direct labor 5.00 Variable factory overhead Fixed factory overhead Total costs 4.00 2.00 $14.00 buy the part and rent facilities to save $5,000 ) make the part to save $15,000 O buy the part and rent facilities to save $15,000 make the part to save $5,000 O make the part to save $10,000 ORundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required a. Calculate the total relevant cost. Should Rundle continue to make the containers? b. Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $11,600 per month, calculate the total avoidable costs. Should Rundle continue to make the containers? Answer is complete but not entirely correct. $ a. Total relevant cost a. Should Rundle continue to make the containers? b. Total avoidable cost b. Should Rundle continue to make the containers? 190.650,000 Yes $24,180,000 $ 5,200 6,100 4,000 7,800…
- Carver Company manufactures a component used in the production of one of its main products. The following cost information is available: Direct materials $410.00 Direct labor (variable) 100 Variable manufacturing overhead Fixed manufacturing overhead A supplier has offered to sell the component to Carver for $640.00 per unit. If Carver buys the component from the supplier, the released facilities can be used to manufacture a product that would generate a contribution margin of $20,000.00 annually. Assuming that Carver needs 4,000 components annually and that the fixed manufacturing overhead is unavoidable, what would be the impact on operating income if Carver outsources? 80 30 A. Operating income would decrease by $180,000.00. B. Operating income would increase by $200,000.00. C. Operating income would increase by $20,000.00. D. Operating income would decrease by $20,000.00.Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40: Number of parts produced annually 26,000 Fixed costs $41,000 Variable costs $67,000 Total cost to produce $108,000 Jackson Corporation can purchase the part from an outside supplier for $4.50 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation buys the part, what is the most Jackson Corporation can spend per unit so that operating income is equal to $98,000? Question 23 options: $2.98 $2.19 $3.77 $1.52Part P40 is a part used in the production of dehumidifiers at Pollock Corporation. The following costs and data relate to the production of Part P40: Number of parts produced annually Fixed costs Variable costs Total cost to produce 25,000 $44,000 $68,000 $112,000 Pollock Corporation can purchase the part from an outside supplier for $4.55 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If the company buys the part, what is the most it can spend per unit so that operating income is equal to $97,000? (Round the final answer to the nearest cent.) A. $3.00 B. $3.88 OC. $2.12 D. $1.55