The Shamrock Corporation uses an injection molding machine to make a plastic product, 239, after receiving...
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The Shamrock Corporation uses an injection molding machine to make a plastic product, 239, after receiving firm orders from its customers. Below are the average waiting time and manufacturing cycle time per order for each product. i (Click the icon to view the average manufacturing cycle times for 239 and Y28.) Shamrock is still debating whether it should introduce Y28. The following table provides information on selling prices, variable costs, and inventory carrying costs for Z39 and Y28: (Click the icon to view the table.) Read the requirement More Infor X Shamrock estimates that it will receive 40 orders for 239 during the coming year. Each order of Z39 will take 70 hours of machine time. The annual machine capacity is 3,000 hours. Shamrock is considering introducing a new product, Y28. The company expects it will receive 10 orders of Y28 in the coming year. Each order of Y28 will take 10 hours of machine time. Assuming the demand for Z39 will not be affected by the introduction of Y28, the average waiting time for an order received is 985 hours. The average manufacturing cycle time per order for 239 if Shamrock introduces Y28 is 1,055 hours, and the average manufacturing cycle time per order for Y28 is 995 hours. The average amount of time that an order for Z39 will wait in line before it is processed is 490 hours. The average manufacturing cycle time per order for 239 without introducing Y28 is 560. Data Table Product Z39 Y28 Annual Average Number of Orders 40 10 Selling Price per Order if Average Manufacturing Cycle Time per Order Is Less Than 975 Hours $ 21,000 8,600 More Than 975 Hours $ 20,500 8,100 Variable Cost per Order 11,550 $ 5,160 Inventory Carrying Cost per Order per Hour 0.70 0.20 $ Begin by calculating the expected increase in contribution from Y28. First select the formula then calculate the expected increase contribution from Y28. Increase in expected contribution from Y28 29,400 Contribution margin per order for Y28 2,940 Now determine the effect of increasing the average manufacturing cycle time by completing the following table. (Round your answers to the nearest cent. If a box is not used in the table, leave the box empty; do not enter a zero.) Product Z:39 Y28 Total X Expected number of orders of Y28 10 Effect of Increasing Average Manufacturing Cycle Time Expected Loss in Revenues for Z39 Expected Increase in Carrying Costs for all Products Expected Loss in Revenues Plus Expected Increase in Carrying Cost of Introducing Y28 The Shamrock Corporation uses an injection molding machine to make a plastic product, 239, after receiving firm orders from its customers. Below are the average waiting time and manufacturing cycle time per order for each product. i (Click the icon to view the average manufacturing cycle times for 239 and Y28.) Shamrock is still debating whether it should introduce Y28. The following table provides information on selling prices, variable costs, and inventory carrying costs for Z39 and Y28: (Click the icon to view the table.) Read the requirement More Infor X Shamrock estimates that it will receive 40 orders for 239 during the coming year. Each order of Z39 will take 70 hours of machine time. The annual machine capacity is 3,000 hours. Shamrock is considering introducing a new product, Y28. The company expects it will receive 10 orders of Y28 in the coming year. Each order of Y28 will take 10 hours of machine time. Assuming the demand for Z39 will not be affected by the introduction of Y28, the average waiting time for an order received is 985 hours. The average manufacturing cycle time per order for 239 if Shamrock introduces Y28 is 1,055 hours, and the average manufacturing cycle time per order for Y28 is 995 hours. The average amount of time that an order for Z39 will wait in line before it is processed is 490 hours. The average manufacturing cycle time per order for 239 without introducing Y28 is 560. Data Table Product Z39 Y28 Annual Average Number of Orders 40 10 Selling Price per Order if Average Manufacturing Cycle Time per Order Is Less Than 975 Hours $ 21,000 8,600 More Than 975 Hours $ 20,500 8,100 Variable Cost per Order 11,550 $ 5,160 Inventory Carrying Cost per Order per Hour 0.70 0.20 $ Begin by calculating the expected increase in contribution from Y28. First select the formula then calculate the expected increase contribution from Y28. Increase in expected contribution from Y28 29,400 Contribution margin per order for Y28 2,940 Now determine the effect of increasing the average manufacturing cycle time by completing the following table. (Round your answers to the nearest cent. If a box is not used in the table, leave the box empty; do not enter a zero.) Product Z:39 Y28 Total X Expected number of orders of Y28 10 Effect of Increasing Average Manufacturing Cycle Time Expected Loss in Revenues for Z39 Expected Increase in Carrying Costs for all Products Expected Loss in Revenues Plus Expected Increase in Carrying Cost of Introducing Y28
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
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