An electronics company produces many types of expensive components. A recent contract for a batch of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
An electronics company produces many types of expensive components. A recent contract for a batch of components (KRS) was priced by the company's accountant. Although the company is short of work, the accountant has advised the managing director that the contract should not be accepted because it will result in a loss, as follows: Contract KRS Contract price Less: Materials K 65,000 K 100,000 Labour Depreciation Variable overheads Fixed overhead allocation Loss REQUIRED: Selling price The following additional information is available: K10,000 of material, for which there is no other use, is already in stock. If the contract does not g ahead, it will be disposed of at a cost of K1,000. A contract has been agreed for K5,000 worth of stock. The balance of the stock will also need to be purchased. Direct materials Labour costs include an allocation of supervisor's costs of K20,000. If the contract is not accepted, some of the workforce will be made redundant at a cost of K10,000. Direct labour It has just been realized that the machinery for the contract needs some modification at a cost of K3,000. If the machinery is not used in the contract it will be sold for K5,000. The contract will take 3,600 direct labour hours. K 100 49,000 (a) Should the contract be accepted or rejected? Justify your inclusion or exclusion of costs and state what other factors should be taken into account. (b) Before a final decision is made, the company receives a new order for its productions. The following information is available: Per unit 45 10,000 20 6,000 20,000 10 150,000 15 50,000 Allocated fixed costs Variable cost To make one unit takes five labour hours. The company does not have the labour hours available to complete contract KRS and accept the new order. Should contract KRS or the new order be accepted? Explain your reasons and give supporting figures. C. Decision making is not concerned solely with costs and revenues.' Give some examples of non- financial considerations that may be taken into account when making various types of decision. An electronics company produces many types of expensive components. A recent contract for a batch of components (KRS) was priced by the company's accountant. Although the company is short of work, the accountant has advised the managing director that the contract should not be accepted because it will result in a loss, as follows: Contract KRS Contract price Less: Materials K 65,000 K 100,000 Labour Depreciation Variable overheads Fixed overhead allocation Loss REQUIRED: Selling price The following additional information is available: K10,000 of material, for which there is no other use, is already in stock. If the contract does not g ahead, it will be disposed of at a cost of K1,000. A contract has been agreed for K5,000 worth of stock. The balance of the stock will also need to be purchased. Direct materials Labour costs include an allocation of supervisor's costs of K20,000. If the contract is not accepted, some of the workforce will be made redundant at a cost of K10,000. Direct labour It has just been realized that the machinery for the contract needs some modification at a cost of K3,000. If the machinery is not used in the contract it will be sold for K5,000. The contract will take 3,600 direct labour hours. K 100 49,000 (a) Should the contract be accepted or rejected? Justify your inclusion or exclusion of costs and state what other factors should be taken into account. (b) Before a final decision is made, the company receives a new order for its productions. The following information is available: Per unit 45 10,000 20 6,000 20,000 10 150,000 15 50,000 Allocated fixed costs Variable cost To make one unit takes five labour hours. The company does not have the labour hours available to complete contract KRS and accept the new order. Should contract KRS or the new order be accepted? Explain your reasons and give supporting figures. C. Decision making is not concerned solely with costs and revenues.' Give some examples of non- financial considerations that may be taken into account when making various types of decision. An electronics company produces many types of expensive components. A recent contract for a batch of components (KRS) was priced by the company's accountant. Although the company is short of work, the accountant has advised the managing director that the contract should not be accepted because it will result in a loss, as follows: Contract KRS Contract price Less: Materials K 65,000 K 100,000 Labour Depreciation Variable overheads Fixed overhead allocation Loss REQUIRED: Selling price The following additional information is available: K10,000 of material, for which there is no other use, is already in stock. If the contract does not g ahead, it will be disposed of at a cost of K1,000. A contract has been agreed for K5,000 worth of stock. The balance of the stock will also need to be purchased. Direct materials Labour costs include an allocation of supervisor's costs of K20,000. If the contract is not accepted, some of the workforce will be made redundant at a cost of K10,000. Direct labour It has just been realized that the machinery for the contract needs some modification at a cost of K3,000. If the machinery is not used in the contract it will be sold for K5,000. The contract will take 3,600 direct labour hours. K 100 49,000 (a) Should the contract be accepted or rejected? Justify your inclusion or exclusion of costs and state what other factors should be taken into account. (b) Before a final decision is made, the company receives a new order for its productions. The following information is available: Per unit 45 10,000 20 6,000 20,000 10 150,000 15 50,000 Allocated fixed costs Variable cost To make one unit takes five labour hours. The company does not have the labour hours available to complete contract KRS and accept the new order. Should contract KRS or the new order be accepted? Explain your reasons and give supporting figures. C. Decision making is not concerned solely with costs and revenues.' Give some examples of non- financial considerations that may be taken into account when making various types of decision. An electronics company produces many types of expensive components. A recent contract for a batch of components (KRS) was priced by the company's accountant. Although the company is short of work, the accountant has advised the managing director that the contract should not be accepted because it will result in a loss, as follows: Contract KRS Contract price Less: Materials K 65,000 K 100,000 Labour Depreciation Variable overheads Fixed overhead allocation Loss REQUIRED: Selling price The following additional information is available: K10,000 of material, for which there is no other use, is already in stock. If the contract does not g ahead, it will be disposed of at a cost of K1,000. A contract has been agreed for K5,000 worth of stock. The balance of the stock will also need to be purchased. Direct materials Labour costs include an allocation of supervisor's costs of K20,000. If the contract is not accepted, some of the workforce will be made redundant at a cost of K10,000. Direct labour It has just been realized that the machinery for the contract needs some modification at a cost of K3,000. If the machinery is not used in the contract it will be sold for K5,000. The contract will take 3,600 direct labour hours. K 100 49,000 (a) Should the contract be accepted or rejected? Justify your inclusion or exclusion of costs and state what other factors should be taken into account. (b) Before a final decision is made, the company receives a new order for its productions. The following information is available: Per unit 45 10,000 20 6,000 20,000 10 150,000 15 50,000 Allocated fixed costs Variable cost To make one unit takes five labour hours. The company does not have the labour hours available to complete contract KRS and accept the new order. Should contract KRS or the new order be accepted? Explain your reasons and give supporting figures. C. Decision making is not concerned solely with costs and revenues.' Give some examples of non- financial considerations that may be taken into account when making various types of decision.
Expert Answer:
Related Book For
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
Posted Date:
Students also viewed these human resource management questions
-
An electronics company produces transistors, resistors, and computer chips. Each transistor requires four units of copper, one unit of zinc, and two units of glass. Each resistor requires three,...
-
An electronics company produces a high-end processor at a daily rate of 7792 units. The daily demand for the processor is 3904 units. The company operates 334 days per year. The setup cost is $1000...
-
Do you believe that ethical behavior should not be affected by outside considerations? Why or why not?
-
Which of the following in not a function of DBA? A. Network Maintenance B. Routine Maintenance C. Schema Definition D. Authorization for data access
-
Needham Corporation has a $200,000 balloon mortgage payment due in early August. To meet its obligation, it decided on August 1 to accelerate collection of accounts receivable by assigning $260,000...
-
What are the downsides of these access negotiation techniques? Stephanie had decided to use her Masters project to build upon the research she had undertaken as part of her undergraduate studies....
-
Reconsider the data from Problem 56. What is the capital recovery cost of Model 127B? Data from problem 56 Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each...
-
The owner of the Chocolate Outlet Store wants to forecast chocolate demand. Demand for the preceding four years is shown in the following table: YEAR DEMAND (POUNDS) 1 .......... 68,800 2 .............
-
(1 point) A local polka band wants to make and sell CDs of its songs. Suppose it costs $ 1000 to record, S 450 to edit, and S 350 for album artwork, and suppose each CD that is manufactured will cost...
-
the aisles. They line up 10 deep at checkouts with carts full of Trader Joe's exclusive $2.99 Charles Shaw wine-aka "Two- Buck Chuck"-and an assortment of other exclusive gourmet products at...
-
Neue Co . incurred the following costs during its first year of operations: Legal fees for incorporation and other related matters $ 5 5 , 0 0 0 Underwriters fees for initial stock offering 4 0 , 0 0...
-
BC Corporation has the following balance sheet : Assets Cash $2,000 Accounts receivable $7,000 Inventory $6,000 Long-term assets $4,000 Total $19,000 Liabilities and Equity Accounts Payable $5,000...
-
The figure shows a spinner with eight congruent sectors in the cy-plane. The origin and three points are labeled. If the coordinates of X are (-2, -53) what is the measure of angle XOB? (A) (B) (C) T...
-
If the graph shown represents Stella's budget constraint, and salads cost $9, how much does Stella have to spend on these two items? $64 O O G This question cannot be answered without more...
-
In Louisiana, the price of beef recently increased due to the popularity of the Keto diet. Leather is a byproduct of raising cattle and producing beef for sale. Show the effect of this event by...
-
The old space station Mir was 3.59 x 105 m above the surface of Earth. g 0000 CM 3.59 x 105 m 0.. 5.97 x 1024 kg R= 6.37 x 106 m
-
Sauer Milk Incorporated wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: Plan A Debt Preferred stock Common equity Plan B...
-
One of the significant and relevant accounts for this cycle is equipment. For this account, what would typically be the most relevant assertions for the auditor to consider? Why is it important for...
-
The following income statement was prepared for Ludlum, Clancy, Follet & Associates, a partnership comprised of four partners who share income equally. The adjusted cost base to Mr. Clancy of his...
-
Patty, a single parent of two children (ages nine and seven) works part-time as a clerk in a law office. She has provided you with the following information for 2012: Income: Workers' Compensation...
-
Dave Stieb reported the following information for tax purposes: Brackets indicate capital loss. ** Includes a $4,000 business investment loss. REQUIRED Compute the income under Division B for each...
-
What is an injunction?
-
What is the main effect of increased use of liability insurance?
-
What are the arguments in favour of imposing a wide liability on professionals?
Study smarter with the SolutionInn App