1. At an activity level of 9,400 machine-hours in a month, Nooner Corporation\'s
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Question
1. At an activity level of 9,400 machine-hours in a month, Nooner Corporation's total variable production engineering cost is $823,440 and its total fixed production engineering cost is $195,020. What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 9,800 machine-hours in a month? Assume that this level of activity is within the relevant range. (Do not round intermediate calculations.)
2. Colen Corporation produces and sells a single product. In October, the company sold 2,000 units. Its total sales were $145,000, its total variable expenses were $79,100, and its total fixed expenses were $56,000.
A. Construct the company's contribution format income statement for October. Net Operating income?
B. Redo the company's contribution format income statement assuming that the company sells 1,900 units. Net Operating income?
3. Gilde Industries is a division of a major corporation. Last year the division had total sales of $24,483,900, net operating income of $2,693,229, and average operating assets of $5,502,000. The company's minimum required rate of return is 12%.
A. What is the division's margin?
B. What is the division's turnover?
C. What is the division's return on investment (ROI)?
4. The contribution margin ratio of Thronson Corporation's only product is 61%. The company's monthly fixed expense is $456,300 and the company's monthly target profit is $42,300.
A. Determine the dollar sales to attain the company's target profit.
5. Brewer Company is considering purchasing a machine that would cost $626,820 and have a useful life of 9 years. The machine would reduce cash operating costs by $101,100 per year. The machine would have a salvage value of $107,300 at the end of the project. (Ignore income taxes.)
A. Compute the payback period for the machine.
B. Compute the simple rate of return for the machine
6. Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $534,000 or a new model 240 machine costing $422,000 to replace a machine that was purchased 5 years ago for $473,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired.
Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A.
Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $422,000 in the new machine, the money could be invested in a project that would return a total of $469,000.
In making the decision to buy the model 240 machine rather than the model 370 machine, the sunk cost was: ?
7. Gilpatric Corporation produces and sells two products. In the most recent month, Product Q71M had sales of $31,500 and variable expenses of $8,540. Product V04P had sales of $52,500 and variable expenses of $36,820. The fixed expenses of the entire company were $35,680.
A. Construct the company's contribution format income statement for October. Net Operating income?
B. Redo the company's contribution format income statement assuming that the company sells 1,900 units. Net Operating income?
3. Gilde Industries is a division of a major corporation. Last year the division had total sales of $24,483,900, net operating income of $2,693,229, and average operating assets of $5,502,000. The company's minimum required rate of return is 12%.
A. What is the division's margin?
B. What is the division's turnover?
C. What is the division's return on investment (ROI)?
4. The contribution margin ratio of Thronson Corporation's only product is 61%. The company's monthly fixed expense is $456,300 and the company's monthly target profit is $42,300.
A. Determine the dollar sales to attain the company's target profit.
5. Brewer Company is considering purchasing a machine that would cost $626,820 and have a useful life of 9 years. The machine would reduce cash operating costs by $101,100 per year. The machine would have a salvage value of $107,300 at the end of the project. (Ignore income taxes.)
A. Compute the payback period for the machine.
B. Compute the simple rate of return for the machine
6. Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $534,000 or a new model 240 machine costing $422,000 to replace a machine that was purchased 5 years ago for $473,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired.
Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A.
Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $422,000 in the new machine, the money could be invested in a project that would return a total of $469,000.
In making the decision to buy the model 240 machine rather than the model 370 machine, the sunk cost was: ?
7. Gilpatric Corporation produces and sells two products. In the most recent month, Product Q71M had sales of $31,500 and variable expenses of $8,540. Product V04P had sales of $52,500 and variable expenses of $36,820. The fixed expenses of the entire company were $35,680.
The break-even point for the entire company is closest to: ?Explanation / Answer
Answer:1 Variable cost per unit=$823,440/9400 machine hours=$87.6 per machine hour
Total cost=Variable +Fixed
=$87.6*9800 MH+$195,020
=$1053500
Cost per unit=$1053500/9800 MH
=$107.5 Per MH
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