The Houston Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Houston Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $85 and has direct material costs of $55 incurred at the start of the machining operation. Houston has no other variable costs. Houston can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Read the requirements. Requirement 1. Houston is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,350 units. The annual cost of these jigs and tools is $40,000. Should Houston acquire these tools? Show your calculations. Producing 1,350 more units will generate contribution (throughput) margin and operating income because Select the formula, then enter the amounts to calculate the change in throughput contribution. Change in throughput Should Houston acquire these tools? The in throughput contribution margin is Therefore, Houston implement the new design. = contribution the incremental costs by Data table - Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($640,000 160,000; $160,000 160,000) Machining Finishing 180,000 units 160,000 units 160,000 units 160,000 units $640,000 $4 per unit $160,000 $1 per unit Requirement 2. The production manager of the Machining Department has submitted a proposal to do faster setups that would increase the annual capacity of the Machining Department by 9,500 units and would cost $22,000 per year. Should Houston implement the change? Show your calculations. Increasing its capacity further increase contribution (throughput) margin. Houston implement the change to increase production. Requirement 3. An outside contractor offers to do the finishing operation for 8,000 units at $3 per unit, triple the $1 per unit that it costs Houston to do the finishing in-house. Should Houston accept the subcontractor's offer? Show your calculations. Select the formula you will use to calculate the change in throughput contribution. Then, enter the amounts in the formula and calculate the change in throughput contribution. Change in throughput = contribution contract with an outside contractor to do 8,000 units of finishing at $3 per unit because the Houston in throughput contribution is incremental costs by Requirement 4. The Hasting Corporation offers to machine 6,200 units at $2 per unit, half the $4 per unit that it costs Houston to do the machining in-house. Should Houston accept Hasting's offer? Show your calculations. Operating costs in the Machining Department of $640,000, or $4 per unit, are costs. Houston save any of these costs by subcontracting machining 6,200 units to Hasting. Total costs will be greater by Houston accept Hasting's order. Requirement 5. Houston produces 2,800 defective units at the machining operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units at the machining operation is Because the Machining Department has a capacity of 180,000 units, it production to the Finishing Department. Therefore, there produce and transfer the annual opportunity cost of producing defective units in the Machining Department. Requirement 6. Houston produces 2,800 defective units at the finishing operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units in the Finishing Department is Because the Finishing Department a bottleneck operation, the cost of a defective unit is because of the of contribution margin. The Houston Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $85 and has direct material costs of $55 incurred at the start of the machining operation. Houston has no other variable costs. Houston can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Read the requirements. Requirement 1. Houston is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,350 units. The annual cost of these jigs and tools is $40,000. Should Houston acquire these tools? Show your calculations. Producing 1,350 more units will generate contribution (throughput) margin and operating income because Select the formula, then enter the amounts to calculate the change in throughput contribution. Change in throughput Should Houston acquire these tools? The in throughput contribution margin is Therefore, Houston implement the new design. = contribution the incremental costs by Data table - Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($640,000 160,000; $160,000 160,000) Machining Finishing 180,000 units 160,000 units 160,000 units 160,000 units $640,000 $4 per unit $160,000 $1 per unit Requirement 2. The production manager of the Machining Department has submitted a proposal to do faster setups that would increase the annual capacity of the Machining Department by 9,500 units and would cost $22,000 per year. Should Houston implement the change? Show your calculations. Increasing its capacity further increase contribution (throughput) margin. Houston implement the change to increase production. Requirement 3. An outside contractor offers to do the finishing operation for 8,000 units at $3 per unit, triple the $1 per unit that it costs Houston to do the finishing in-house. Should Houston accept the subcontractor's offer? Show your calculations. Select the formula you will use to calculate the change in throughput contribution. Then, enter the amounts in the formula and calculate the change in throughput contribution. Change in throughput = contribution contract with an outside contractor to do 8,000 units of finishing at $3 per unit because the Houston in throughput contribution is incremental costs by Requirement 4. The Hasting Corporation offers to machine 6,200 units at $2 per unit, half the $4 per unit that it costs Houston to do the machining in-house. Should Houston accept Hasting's offer? Show your calculations. Operating costs in the Machining Department of $640,000, or $4 per unit, are costs. Houston save any of these costs by subcontracting machining 6,200 units to Hasting. Total costs will be greater by Houston accept Hasting's order. Requirement 5. Houston produces 2,800 defective units at the machining operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units at the machining operation is Because the Machining Department has a capacity of 180,000 units, it production to the Finishing Department. Therefore, there produce and transfer the annual opportunity cost of producing defective units in the Machining Department. Requirement 6. Houston produces 2,800 defective units at the finishing operation. What is the cost to Houston of the defective items produced? Explain your answer briefly. The cost of 2,800 defective units in the Finishing Department is Because the Finishing Department a bottleneck operation, the cost of a defective unit is because of the of contribution margin.
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Survey of College Math Retirement Planning Project Name Overview: In this project you are going to determine the amount of money needed at retirement and the investment requirements needed to meet...
-
A bond with FV = $ 1 0 0 0 , YTM = 5 % , and annual coupon rate of 1 2 % ( paid semi - annually ) matures on 0 1 / 0 1 / 2 0 2 5 . What is the dirty price of the bond on 0 4 / 0 1 / 2 0 2 4 ?
-
You currently lease land to graze livestock. Your lease is up this year, and the landowner has offered you a 1 5 - year contract to lease the land for $ 5 5 . 2 5 / ac for 1 5 years, with the first...
-
Which statement does NOT reflect a way that journals require authors to disclose potential or actual conflicts of interest? Group of answer choices Require researcher's Federal tax statements Require...
-
Minden Corporations records show the following results for its first three years of operations: In year 4, Minden generated $2 million taxable income ($900,000 of which was foreign source) and paid...
-
The uniform 10-kg rod AB is supported by a ball-and-socket joint at A and by the cord CG that is attached to the midpoint G of the rod. Knowing that the rod leans against a frictionless vertical wall...
-
Chip, Dale and Duck are partners of a trading firm and share profits and losses in the ratio 3:2:1. The firm's balance sheet on 31 December 2006 was: Dale retired from the Partnership on 1 January...
-
The following is a partially completed lower section of a departmental expense allocation spreadsheet for Cozy Bookstore. It reports the total amounts of direct and indirect expenses allocated to its...
-
The Littlefield Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product....
-
1. How are you going to promote Ethical Communication? 2. Are you Pro or Anti Globalization? Why? 3. Direction: Write an explanation essay using one of the topics below. Follow the instruction below....
-
What are the strategic imperatives driving the evolution of organizational structures in the era of digital transformation, and how do they reconcile traditional hierarchies with the demands for...
-
Holton Company makes three products in a single facility. Data concerning these products follow: Selling price per unit Direct materials Direct labor Variable manufacturing overhead Variable selling...
-
1. Suppose a wheel first starts spinning from rest with an angular acceleration of 70.4 rad/s 2 . Then after 20 s, the wheel starts to stop causing an angular acceleration of -45.6 rad/s 2 . How long...
-
All of Pershing Electronics' customers take their discount from their credit terms of 2/10 net 30 days. If they invoiced $500,000 over the last quarter, how much did their customers save by prompt...
-
1) List and describe each of the seven interlinking functions of human resource management (HRM) b) Describe why HRM is critical to organizations Question 2) Why is it important for HR management to...
-
Current Attempt in Progress Ivanhoe Co. uses a standard job cost system with a normal capacity of 25,100 direct labour hours. Ivanhoe Co. produces 12,000 units, which cost $207,900 for direct labour...
-
Is it a breach of fiduciary duty for a director of a real estate investment trust (REIT) negotiating a joint venture on behalf of the REIT with another director for the development of a portfolio of...
-
In the context of an LBO, does the holder of senior debt take more or less risk than the holder of junior debt?
-
In a secondary LBO, can an LBO fund accept that the management team does not reinvest part of the capital gains achieved on the first LBO in the new LBO? Why?
-
What are the different possible exit routes after an LBO?
Study smarter with the SolutionInn App