Qw.111. 12-30 Factors affecting investment decisions by managers and accept or reject decisionsLMTC Ltd manufactures PE clothes for primary schools in Northamptonshire, the UnitedKingdom. The company pro duces 30,000 units per academic session. The following is the costper unit: £ Direct materials 6 Direct labor 8 Variable overhead 12 Manufacturing overhead 24Total 50 It has been established that £16 of the overhead is fixed. Kids Jump Ltd has offered tosell 30,000 units of the PE clothes to LMTC Ltd for £46 per unit. If LMTC Ltd accepts the offer,some of the facilities presently used to manufacture the PE clothes could be leased to a thirdparty and would generate a revenue of £65,000 per academic session. Additionally, one-fourthof the fixed overhead cost incurred in PE clothes production would be totally eliminated.a. Should LMTC Ltd accept or reject the offer from Kids Jump Ltd?b. What other factors do managers consider in accepting or rejecting of investmentdecisions

Investment decisions involve the process of choosing how to allocate money or resources in order to…

of the fixed overhead cost incurred in PE a. Should LMTC Ltd accept or reject the offer from Kids Jump Ltd? b. What other factors do managers consider in accepting or rejecting of investment decisions

of the fixed overhead cost incurred in PE a. Should LMTC Ltd accept or reject the offer from Kids Jump Ltd? b. What other factors do managers consider in accepting or rejecting of investment decisions

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 39E

See similar textbooks

Similar questions

Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following per unit data apply for sales to regular customers: Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs Select one: The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires. What is the total cost of producing 2,000 tires? a. $39,000 b. $78,000 C. 1. $62,000 $20 3 d. they are all wrong 6 10 $39
BAX Plc. produces and sells a specialised computer software programs. Estimated unit data for next year are as follows:Per unit £ £ Selling price 600Variable costs:Labour 200Materials 40Variable overheads. 10 250Profit 350 Anticipated fixed costs for the year are £80,000 for administration and £60,000 for selling and distribution. Estimated sales for the year are 640 computer soft wares.You have been recently hired as graduate business analyst and for business decision-making purposes in BAX Plc. You are tasked to:a) Determine.i) Breakeven point in terms of number of software programs sold.ii) The margin of safety as a percentage of estimated sales. b) The company’s target profit for the year is £56000.i) Discuss whether the estimated sales volume will be sufficient to…
Head-First Company plans to sell 4,200 bicycle helmets at $67 each in the coming year. Product costs include: Direct materials per helmet $29 Direct labor per helmet 8.00 Variable factory overhead per helmet 5.00 Total fixed factory overhead 19,000 Variable selling expense is a commission of $4.00 per helmet, fixed selling and administrative expense totals $29,900. Required: 1. Calculate the total variable cost per unit 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin income statement for Head-First Company for the coming year
Giant Ltd manufactures three different types of products: X, Y and Z. It was expected that the production and demand for the next year on these products as follows:                                    Product X                  Product Y                 Product Z Units                          1500                            2250                           3000 Additional details about the products are also as follows: Each unit                  Product X                 Product Y                 Product Z                                           £                                    £                                £ Selling price                   174                              340                            310 Materials                          32                                80                   60 Labour                             40                                 96                  80 Variable overheads                   24                                 60…
BAX Plc. produces and sells a specialised computer software programs. Estimated unit data for next year are as follows:             Per unit                      £ £ Selling price              600 Variable costs: Labour                       200 Materials                    40 Variable overheads.                        10 250 Profit 350 Anticipated fixed costs for the year are £80,000 for administration and £60000 for selling and distribution. Estimated sales for the year are 640 computer soft wares. You have been recently hired as graduate business analyst and for business decision-making purposes in BAX Plc. You are tasked to: calculate Breakeven point in terms of number of software programs sold. calculate The margin of safety as a percentage of estimated sales. The company’s target profit for the year is £56000. Discuss whether the estimated sales volume will be sufficient to achieve this target.…
Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 40,000 ceiling fans and 70,000 table fans in the coming year. Product price and cost information includes: Ceiling Fan Table Fan Price $56   $17   Unit variable cost $13   $8   Direct fixed cost $21,200   $43,000   Common fixed selling and administrative expenses total $98,000. Required: Question Content Area 1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)?Sales mix of ceiling fans to table fans = ___________ : ______________ 2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Round your intermediate calculations and final answers to the nearest whole number. Break-even ceiling fans _______ Break-even table fans ______ 3. Prepare a contribution-margin-based income…
2 Cierra, Inc. manufactures computer chips. Currently, the costs per unit are as follows: Direct materials $1.00 Direct labor 10.00 Variable manufacturing overhead 5.00 Fixed manufacturing overhead 8.00 Total $24.00 Chips Corp., has contacted Cierra with an offer to sell to Cierra 10,000 of the chips for $22.00 per chip. If Cierra accepts the proposal, $50,000 of the fixed overhead will be eliminated. Should Cierra make or buy the chips? Justify your answer with calculations.
17. AAA Inc. produces three products. Production and cost information is as follows: Model Y Model O Model U Units produced 2,000 6,000 12,000 Direct Labor hours 4,000 2,000 4,000 Number of setups 100 150 250 The consumption ratio for the number of setups would be? AAA Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information given as follows: Wall Mirrors Specialty Windows Units produced 25 25 Material moves per product line 5 15 Direct labor hours per unit 200 200 Budgeted materials handling cost P50,000 18. Under a costing system that allocates overhead on the basis of direct labor hours, the materials handling costs allocated to one unit of wall mirrors would be? 19. Under ABC, materials handling costs allocated to one unit of wall mirrors would be?
es Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. $ 7.35 2.95 0.95 11.70 $ 22.95 Mc Graw Hill ! 1 Materials Labor Variable overhead Fixed overhead ($1,755,000 per year; 150,000 units per year) Total Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $17.80 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $26.50. Alpena has the total capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive embossing step. This will result in an additional $2.85 per case labor cost. The material cost of of the Decatur case will be the same as for the current models. The Decatur order will also require a one-time rental of embossing equipment for $6,549. Q A Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's…
pproximately Relevant ABC Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $147,000 Number of setups 120 Ordering materials 18,000 Number of orders 1,200 Machining 126,000 Machine hours 10,500 Receiving 30,240 Receiving hours 1,260 Silven produces two models of cell phones with the following expected activity demands: Model X Model Y Units completed 5,400 10,800 Number of setups 80 40 Number of orders 400 800 Machine hours 6,000 4,500 Receiving hours 420 840 Required: 1. Determine the total overhead assigned to each product using the four activity drivers. Total Overhead Assigned Model Y 2. Determine the total overhead assigned to each model using the two most expensive activities. The…
Rianne Company produces a light fixture with the following unit cost:Direct materials $2Direct labor 1Variable overhead 3Fixed overhead 2Unit cost $8The production capacity is 300,000 units per year. Because of a depressed housing market,the company expects to produce only 180,000 fixtures for the coming year. The company alsohas fixed selling costs totaling $500,000 per year and variable selling costs of $1 per unit sold.The fixtures normally sell for $12 each.At the beginning of the year, a customer from a geographic region outside the area normallyserved by the company offered to buy 100,000 fixtures for $7 each. The customer also offeredto pay all transportation costs. Since there would be no sales commissions involved, this orderwould not have any variable selling costs.Required:1. CONCEPTUAL CONNECTION Based on a quantitative (numerical) analysis, should thecompany accept the order?2. CONCEPTUAL CONNECTION What qualitative factors might impact the decision?Assume that no other…
K Company estimates that overhead costs for the next year will be $2,871,000 for indirect labor and $870,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 87,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 4 direct labor hours? Multiple Choice $43.00 $33.00 $172.00 $132 00 None of the choices