ed The Engine Guys produces specialized engines for snow climber buses. The company's normal monthly production...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 x $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted? ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 X $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted? ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 x $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted? ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 X $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted? ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 x $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted? ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 X $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted? ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 x $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted? ed The Engine Guys produces specialized engines for "snow climber” buses. The company's normal monthly production volume is 2,500 engines, whereas its monthly production capacity is 5,000 engines. The current selling price per engine is $650. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows: Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead Subtotal Marketing costs: Variable Fixed Subtotal Total unit cost Costs per Unit for Engines $ Incremental benefit of the contract 82 104 21 104 $ 311 $ B2 72 104 $415 Required: Answer the following independent questions. 1-a. The Provincial Bus Company wishes to purchase 610 engines in October. The bus company is willing to pay a fixed fee of $300,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 610 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costs on this government contract. Compute the incremental benefit of the contract. $ 81,010 1-b. Indicate whether the Provincial Bus Company's contract should be accepted. Yes No 2-a. An outside contractor is willing to supply 1,250 engines at a price of $312 per unit. If the offer is accepted, the company will make 1,250 engines in-house and buy 1.250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% and the variable marketing costs per unit on the 1,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.) Buy 1,250 units and make 1.250 units $ Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option $ (63,250) Difference in favour of make option *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 390.000 258.750 208.000 Make 2,500 units 64.000 x $ 0 517 500 x 260 000 80,000 x 180.000 180.000 $ 1,100,750 x $1,037,500 x ded Buy 1,250 units and make 1,250 units Purchase cost Variable manufacturing Fixed manufacturing Variable marketing Fixed marketing Cost of option Difference in favour of make option (63,250) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. $ Yes No 390,000 258,750 208,000 Make 2,500 units 64,000 x $ 517,500 260,000 80.000 180,000 180,000 $ 1,100,750 X $ 1,037,500 $ 0 69 2-b. Determine whether the contractor's offer should be accepted?
Expert Answer:
Answer rating: 100% (QA)
To calculate the incremental benefit of the contract we need to compare the additional revenue from ... View the full answer
Related Book For
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
In view of the information provided below provide suggestions for the efficient management of trade debtors. INFORMATION MANAGEMENT OF TRADE DEBTORS Debtor management is central to the effective cash...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
You are a lead auditor from ABC Auditors Pty Ltd. Your client is Cassey's Quality Cars Ltd who are a large car dealership with branches across Queensland. ABC Auditors have performed audits for past...
-
At December 31, MediStat Precision Instruments owes $52,000 on Accounts Payable, Salaries Payable of $12,000, and Income Tax Payable of $10,000. MediStat also has $300,000 of Bonds Payable that were...
-
Compound B has the composition 62.1% carbon, 10.3% hydrogen and 27.6% oxygen. Its mass and 1H NMR spectra are shown below. a. b. a. Calculate the empirical formula of B. b. From the mass spectrum,...
-
Unless otherwise specified, which rule will always be processed?
-
Condensed financial data of Lemere Inc. follow. Additional information:1. New plant assets costing $100,000 were purchased for cash during the year.2. Old plant assets having an original cost of...
-
Engineers at electronic company use special wire to manufacture fuzzy logic circuit boards. The wire comes in 1,260 foot rolls that cost $2,700 each. Each board requires 4 1/5 feet of wire. How many...
-
Pathfinder College is a small liberal arts college that wants to improve its admissions process. In particular, too many of its incoming freshmen have failed to graduate for a variety of reasons,...
-
(a) Determine if the following algorithm terminates. If so, prove this using the potential method If not, describe an input that would cause the algorithm to run forever. Require: A connected graph G...
-
One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 6.2% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 5.5%. What is the current...
-
Summary & Response Summarizing an article and responding to the author's points. Your draft may be Your draft will be "rough" in that it might contain mistakes or not be in top form just yet, but...
-
A project is expected to create after-tax operating cash flows of $25,000 a year for three years. The initial investment for fixed assets is $50,000. These assets will be worthless at the end of the...
-
Indicate, by marking the correct answer, what the Heckscher - Ohlin model predicts about the changes that will occur when a country opens up to international trade: a . . Production of its export...
-
An array is known as a collection and is one of many collections in java. A collection is a mechanism to hold a set of items such as objects or primitives. As you explore arrays, you will undoubtedly...
-
Prove that for every positive integer n, 1 1+ V2 V3 +. > 2(n +1- 1). Induction Proof
-
With your classmates, form small teams of skunkworks. Your task is to identify an innovation that you think would benefit your school, college, or university, and to outline an action plan for...
-
The following items were taken from the balance sheet of Nike, Inc. InstructionsPerform each of the following.(a) Classify each of these items as an asset, liability, or stockholders' equity sand...
-
Companies prepare balance sheets in order to know their financial position at a specific point in time. This enables them to make a comparison to their position at previous points in time and gives...
-
Margie Anunson was just hired as the assistant treasurer of Northshore Stores, a specialty chain store company that has nine retail stores concentrated in one metropolitan area. Among other things,...
-
Cumulative Normal distribution \(\Phi_{(\mu, \sigma)}\) and probability (a) \(X \sim \phi_{(0,1)}\); what is \(P(X \leq 1.43)\) ? (b) \(X \sim \phi_{(0,1)}\); what is \(P(X>1.43)\) ? (c) \(X \sim...
-
Inverse cumulative Normal distribution \(z\) (a) Find \(z_{0.05}\). (b) Find \(z_{0.95}\). (c) Let \(X \sim \phi_{(2,1)}\). Find \(a\) such that \(P(X \leq a)=0.05\). (d) Let \(X \sim \phi_{(2,1)}\)....
-
The Normal approximation (a) A discrete stochastic variable \(X\) has expected value \(\mu_{X}=3\) and \(\sigma_{X}=1.2\). Use the Normal approximation to find \(P(X \leq 4)\). (b) A continuous...
Study smarter with the SolutionInn App