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# Hi NEO, Please I need help on these homework, due on March

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Hi NEO,
Please I need help on these homework, due on March 9 2012.

E5-1 Fowler Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.

Costs Incurred
Production in Units 5,000 10,000
Total Cost/ Total Cost/
Production Costs Cost Unit Cost Unit
Direct materials \$8,250 \$1.65 \$16,500 \$1.65
Direct labor 9,400 1.88 18,800 1.88
Utilities 1,400 0.28 2,300 0.23
Rent 4,000 0.80 4,000 0.40
Maintenance 800 0.16 1,200 0.12
Supervisory salaries 1,000 0.20 1,000 0.10

Instructions
(a) Define the terms variable costs, fixed costs, and mixed costs.
(b) Classify each cost above as either variable, fixed, or mixed.
E5-9 Regional Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Regional’s base airport to the major city in the state, Metropolis. Each month 40 round-trip flights are made. Shown on page 219 is a recent month’s activity in the form of a cost-volume-profit income statement.

Fare revenues (300 fares) \$45,000
Variable costs
Fuel \$14,000
Snacks and drinks 800
Landing fees 2,000
Supplies and forms 1,200 18,000
Contribution margin 27,000
Fixed costs
Depreciation 3,000
Salaries 15,000
Airport hanger fees 1,750 20,250
Net income \$ 6,750

Instructions
(a) Calculate the break-even point in (1) dollars and (2) number of fares.
(b) Without calculations, determine the contribution margin at the break-even point.
(c) If fares were decreased by 10%, an additional 100 fares could be generated. However, variable costs would increase by 35%. Should the fare decrease be adopted?

E6-7 Shynee Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Sarco, Barco, and Larco. Each of these products can be sold as is, or it can be processed further and sold for a higher price. The company incurs joint costs of \$180,000 to process one batch of the raw material that produces the three joint products. The following cost and sales information is available for one batch of each product.

Sales Value at Allocated Cost to Process Sales Value of
Split-off Point Joint Costs Further Processed Product
Sarco \$200,000 \$40,000 \$120,000 \$300,000
Barco 300,000 60,000 89,000 400,000
Larco 400,000 80,000 250,000 800,000

Instructions
Determine whether each of the three joint products should be sold as is, or processed further.

E6-10 Maggie Sharrer, a recent graduate of Rolling’s accounting program, evaluated the operating performance of Poway Company’s six divisions. Maggie made the following presentation to Poway’s Board of Directors and suggested the Erie Division be eliminated. “If the Erie Division is eliminated,” she said, “our total profits would increase by \$24,500.”

The Other Erie
Five Divisions Division Total
Sales \$1,664,200 \$100,000 \$1,764,200
Cost of goods sold 978,520 76,500 1,055,020
Gross profit 685,680 23,500 709,180
Operating expenses 527,940 48,000 575,940
Net income \$ 157,740 \$ (24,500) \$ 133,240

In the Erie Division, cost of goods sold is \$60,000 variable and \$16,500 fixed, and operating expenses are \$25,000 variable and \$23,000 fixed. None of the Erie Division’s fixed costs will be eliminated if the division is discontinued.

Instructions

BYP6-2 Technology Plus manufactures private-label small electronic products, such as alarm clocks, calculators, kitchen timers, stopwatches, and automatic pencil sharpeners. Some of the products are sold as sets, and others are sold individually. Products are studied as to their sales potential, and then cost estimates are made. The Engineering Department develops production plans, and then production begins. The company has generally had very successful product introductions. Only two products introduced by the company have been discontinued.
One of the products currently sold is a multi-alarm alarm clock. The clock has four alarms that can be programmed to sound at various times and for varying lengths of time. The company has experienced a great deal of difficulty in making the circuit boards for the clocks. The production process has never operated smoothly. The product is unprofitable
at the present time, primarily because of warranty repairs and product recalls. Two models of the clocks were recalled, for example, because they sometimes caused an electric shock when the alarms were being sh
Submitted: 4 years ago.
Category: Homework
Expert:  Neo replied 4 years ago.
Good day!

The last problem has been cut off.

Customer: replied 4 years ago.

Hi NEO,

I just come from work, here is the question that cuts off. Thanks,

BYP6-2 Technology Plus manufactures private-label small electronic products, such as alarm clocks, calculators, kitchen timers, stopwatches, and automatic pencil sharpeners. Some of the products are sold as sets, and others are sold individually. Products are studied as to their sales potential, and then cost estimates are made. The Engineering Department develops production plans, and then production begins. The company has generally had very successful product introductions. Only two products introduced by the company have been discontinued.

One of the products currently sold is a multi-alarm alarm clock. The clock has four alarms that can be programmed to sound at various times and for varying lengths of time. The company has experienced a great deal of difficulty in making the circuit boards for the clocks. The production process has never operated smoothly. The product is unprofitable at the present time, primarily because of warranty repairs and product recalls. Two models of the clocks were recalled, for example, because they sometimes caused an electric shock when the alarms were being shut off. The Engineering Department is attempting to revise the manufacturing process, but the revision will take another 6 months at least.

The clocks were very popular when they were introduced, and since they are private label, the company has not suffered much from the recalls. Presently, the company has a very large order for several items from Kmart Stores. The order includes 5,000 of the multi-alarm clocks. When the company suggested that Kmart purchase the clocks from another manufacturer, Kmart threatened to rescind the entire order unless the clocks were included. The company has therefore investigated the possibility of having another company make the clocks for them. The clocks were bid for the Kmart order based on an estimated

\$6.65 cost to manufacture:

Circuit board, 1 each @ \$2.00 \$2.00

Plastic case, 1 each @ \$0.75 0.75

Alarms, 4 @ \$0.10 each 0.40

Labor, 15 minutes @ \$12/hour 3.00

Overhead, \$2.00 per labor hour 0.50

Technology Plus could purchase clocks to fill the Kmart order for \$11 from Silver Star, a Korean manufacturer with a very good quality record. Silver Star has offered to reduce the price to \$7.50 after Technology Plus has been a customer for 6 months, placing an order of at least 1,000 units per month. If Technology Plus becomes a "preferred customer" by purchasing 15,000 units per year, the price would be reduced still further to \$4.50. Alpha Products, a local manufacturer, has also offered to make clocks for Technology Plus. They have offered to sell 5,000 clocks for \$4 each. However, Alpha Products has been in business for only 6 months. They have experienced significant turnover in their labor force, and the local press has reported that the owners may face tax evasion charges soon. The owner of Alpha Products is an electronic engineer, however, and the quality of the clocks is likely to be good. If Technology Plus decides to purchase the clocks from either Silver Star or Alpha, all the costs to manufacture could be avoided, except a total of \$5,000 in overhead costs for machine depreciation. The machinery is fairly new, and has no alternate use.

Instructions

(a) What is the difference in profit under each of the alternatives if the clocks are to be sold for \$14.50 each to Kmart?

(b) What are the most important nonfinancial factors that Technology Plus should consider when making this decision?

(c) What do you think Technology Plus should do in regard to the Kmart order? What should it do in regard to continuing to manufacture the multi-alarm alarm clocks?

Expert:  Neo replied 4 years ago.

Ok.

Customer: replied 4 years ago.

Thanks,

Expert:  Neo replied 4 years ago.

No problem. :)

Customer: replied 4 years ago.

Hi NEO,

Still expecting your response as regards XXXXX XXXXX homework questions.

Thanks,

Expert:  Neo replied 4 years ago.

Yes; I may be able to post them later tonight or early tomorrow morning.

Expert:  Neo replied 4 years ago.

You need to spend \$3 to view this post. Add Funds to your account and buy credits.
Neo, Tutor
Category: Homework
Satisfied Customers: 12101
Experience: BS Accounting

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