Qorvo Bhd has three departments to manufacture chips, diodes and transistors. Each of these department has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Qorvo Bhd has three departments to manufacture chips, diodes and transistors. Each of these department has a production capacity of 40,000 units per month. Recently, the company experienced an overstocking of chips due to low demand. Analyst forecasts the low demand in semiconductor industry to be temporary and demand will increase after four months. Therefore, management decides to reduce the production of chips next month to be at 25,000 units at a selling price of RM50 per chip. The expected revenues and costs for next month's production are: Sales Direct labours Direct materials Variable manufacturing overhead costs Manufacturing non-variable overheads Marketing and distribution costs Total costs Profit Total (RM) Per unit (RM) 50 15 10 1,250,000 375,000 250,000 100,000 175,000 125,000 1,025,000 225,000 4 7 5 33 7 One of the companies in medical device industry, Boston Scientific (M) Sdn. Bhd has offered to buy 5,000 chips for the coming four months at a price of RM25 per chip. Boston Scientific requires a pentagon-cutting which will increase design cost by RM0.25 per chip. There will be no additional marketing and distribution cost because Boston Scientific will collect the chips from Qorvo Bbd's warehouse. 3. Recently, there was a revision to the analyst's forecast about demand in the semiconductor industry. It is presumed that demand in foreseeable future will remain at 25,000 chips per month. Therefore, Qorvo Bhd plans to develop long-term market for the excess capacity of 15,000 chips by approaching other companies within the medical device industry. Assume that three medical device's companies agreed to enter into a five-year agreement for a supply of 15,000 chips at a price of RM30 per chip. The design cost remains at RM0.25 per chip. On the other hand, if Qorvo Bhd decides to downsize its production capacity to 25,000 units per month, it will be able to save RM30,000 manufacturing non-variable cost per month and a further savings of RM10,000 in monthly marketing costs. Direct materials, direct labor and variable manufacturing overhead will accordingly reduce by 10%. In addition, the company can rent-out the additional space for RM70,000 per month. a. Investigate whether Qorvo Bhd should accept the additional offer of 15,000 chips per month or downsize its production capacity? Qorvo Bhd has three departments to manufacture chips, diodes and transistors. Each of these department has a production capacity of 40,000 units per month. Recently, the company experienced an overstocking of chips due to low demand. Analyst forecasts the low demand in semiconductor industry to be temporary and demand will increase after four months. Therefore, management decides to reduce the production of chips next month to be at 25,000 units at a selling price of RM50 per chip. The expected revenues and costs for next month's production are: Sales Direct labours Direct materials Variable manufacturing overhead costs Manufacturing non-variable overheads Marketing and distribution costs Total costs Profit Total (RM) Per unit (RM) 50 15 10 1,250,000 375,000 250,000 100,000 175,000 125,000 1,025,000 225,000 4 7 5 33 7 One of the companies in medical device industry, Boston Scientific (M) Sdn. Bhd has offered to buy 5,000 chips for the coming four months at a price of RM25 per chip. Boston Scientific requires a pentagon-cutting which will increase design cost by RM0.25 per chip. There will be no additional marketing and distribution cost because Boston Scientific will collect the chips from Qorvo Bbd's warehouse. 3. Recently, there was a revision to the analyst's forecast about demand in the semiconductor industry. It is presumed that demand in foreseeable future will remain at 25,000 chips per month. Therefore, Qorvo Bhd plans to develop long-term market for the excess capacity of 15,000 chips by approaching other companies within the medical device industry. Assume that three medical device's companies agreed to enter into a five-year agreement for a supply of 15,000 chips at a price of RM30 per chip. The design cost remains at RM0.25 per chip. On the other hand, if Qorvo Bhd decides to downsize its production capacity to 25,000 units per month, it will be able to save RM30,000 manufacturing non-variable cost per month and a further savings of RM10,000 in monthly marketing costs. Direct materials, direct labor and variable manufacturing overhead will accordingly reduce by 10%. In addition, the company can rent-out the additional space for RM70,000 per month. a. Investigate whether Qorvo Bhd should accept the additional offer of 15,000 chips per month or downsize its production capacity?
Expert Answer:
Answer rating: 100% (QA)
Answer Statement showing benifit utilising excess ca... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
Qorvo Bhd has three departments to manufacture chips, diodes and transistors. Each of these department has a production capacity of 40,000 units per month. Recently, the company experienced an...
-
Boston Scientific Corporation is a competitor of Kips Bay Medical (FA 5-3). It was organized in 1979 and also develops, produces, and sells medical devices. The following data (in thousands) were...
-
One stage in the manufacture of semiconductor chips applies an insulator on the chips. This process must coat the chip evenly to the desired thickness of 250 microns or the chip will not be able to...
-
The beam shown below is supported by a pin at A and a roller at B. The weight of the beam is 12 kN and a 15 kN force is applied 3 m to the right of A as shown. Determine the reaction forces at A and...
-
Town Bank has $100,000 of 7% debenture bonds outstanding. The bonds were issued at 105 in 2012 and mature in 2032. Requirements 1. How much cash did Town Bank receive when it issued these bonds? 2....
-
According to www.fueleconomy.gov, a random sample of seven 2016 Subaru Forester AWD2.5 L, 4 cyl, automatic cars gave a mean of 26.4miles per gallon (MPG). Assume MPG for this vehicle follow a normal...
-
List and describe the legal elements that comprise the unintentional tort of negligence. Provide an example of a negligence situation involving a personal injury. Provide another example of a...
-
Assume a Bear Sports outlet store began January 2014 with 42 pairs of running shoes that cost the store $36 each. The sale price of these shoes was $68. During January, the store completed these...
-
6. The number of (staircase) paths in the xy-plane from (0, 0) to (7, 5) where each such path is made up of individual steps going one unit upward (U) or one unit to the right (R). (a) 12C5 (b) 12!...
-
Territory and Product Profitability Analysis Pipeline Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions,...
-
Decide which of the following statements are true. Normal distributions are always symmetric and bell-shaped. For any normal distribution, only the mean and median are equal. The mode is different...
-
Switzerland-based Glencore is the worlds largest producer of cobalt, which is mined alongside copper at its Katanga and Mutanda mines in the Democratic Republic of Congo. It is currently considering...
-
For each of the following $1,000-par-value bonds paying semi-annual interest payments, calculate the before- and after-tax cost of debt. Use the 21% corporate tax rate. Issuer Name AT&T Boeing CVS...
-
Should you shop for good employees who are out of work in a bad economy, and then should you terminate existing employees who arent doing their jobs very well after finding a good replacement? What...
-
Suppose that a foreign project has a beta of 0.95, the risk-free return is 3%, and the required return on the market is estimated at 12%. What is the cost of capital for the project?
-
Flotation costs and the cost of debt In March of 2020 PepsiCo, Inc. (PEP) sold $750 million worth of 40-year 3.875% coupon bonds that pay semi-annual interest. At the time the bonds were issued, the...
-
A company borrowed $150,000 on May 1, 2013 and signed a promissory note bearing interest at 10% for 6 months. On the maturity date, the company paid the interest in full and gave a second not without...
-
(a) Use integration by parts to show that (b) If f and g are inverse functions and f' is continuous, prove that (c) In the case where f and t are positive functions and b > a > 0, draw a diagram to...
-
If fixed manufacturing overhead costs are released from inventory under absorption costing, what does this tell you about the level of production in relation to the level of sales?
-
Are variable costs always relevant costs? Explain.
-
Assume that a company has two processing departments-mixing followed by Firing. Explain what costs might be added to the Firing Departments Work in Process account during a period.
-
Consider the feedback system shown in Figure 10.26. a. Using Routh's stability criterion, determine the range of the control gain \(K\) for which the closed-loop system is stable. b. Use MATLAB...
-
Figure 10.40 shows a negative feedback control system. a. Design a P controller such that the damping ratio of the closed-loop system is 0.5 . b. Estimate the rise time, overshoot, and \(2 \%\)...
-
The transfer function of a dynamic system is given by \[G(s)=\frac{s+1}{4 s^{4}+5 s^{3}+2 s^{2}+s+6} \] a. Using Routh's stability criterion, determine the stability of the system. b. Using MATLAB,...
Study smarter with the SolutionInn App