Mallory’s Video Supply has changed its focus tremendously and as a result has dropped the selling price of DVD players from $45 to $38. Some units in the work-in-process inventory have costs of $30 per unit associated with them, but Mallory can only sell these units in their current state for $22 each. Otherwise, it will cost Mallory $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further? a. $5 per unit profit b. $3 per unit loss c. $16 per unit profit d. $12 per unit loss

Mallory’s Video Supply has changed its focus tremendously and as a result has dropped the selling price of DVD players from $45 to $38. Some units in the work-in-process inventory have costs of $30 per unit associated with them, but Mallory can only sell these units in their current state for $22 each. Otherwise, it will cost Mallory $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further? a. $5 per unit profit b. $3 per unit loss c. $16 per unit profit d. $12 per unit loss

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 13MC: Mallorys Video Supply has changed its focus tremendously and as a result has dropped the selling...

See similar textbooks

Similar questions

At the end of the year the production manager is taking inventory and finds 600 units of an older model of invisible fencing that the company no longer manufactures. These obsolete units can be disposed of through their regular channels, thereby incurring variable marketing expenses. What is the lowest price that they should accept for these obsolete units, realizing that if they do not sell them these units will have to be thrown away. (Show all supporting calculations). (NOTE: ignore taxes or other costs not specifically mentioned in the questions.)
Kim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $23,000and sold for $28,000. Another alternative is to sell the units to a junk dealer for $8,500. By how much will they be better off?
Zanatech's market for its remote control has changed significantly and Zanatech has had to drop the selling price per unit from $45 to $38. There are some units in the work in process inventory that have costs of $30 per unit associated with them. Zanatech can sell these units in their current state for $22 each. It will cost Zanatech $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further? $16 per unit profit $3 per unit loss $5 per unit profit O $12 per unit loss
So Hot Ltd has 5,000 units in inventory that cost $1.50 per unit to produce. Due to changing technology, the sales department is having difficulty selling the product. It will cost $2,000 to scrap the units. What is the minimum price for which So Hot should sell these units?
Steele Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racingbikes with limited sales. Steele produces and sells only 10,000 bikes each year. Due to the low volume of activity, Steele is unable to obtainthe economies of scale that larger producers achieve. For example, Steele could buy the handlebars for $31 each; they cost $34 each tomake. The following is a detailed breakdown of current production costs. Item Unit Cost Total Unit Level Costs Materials $16 160,000 Labor 12 120,000 Overhead 2 20,000 Allocated Facility Level Cost 4 40,000 Total $34 340,000 After seeing these figures, Steele’s president remarked that it would be foolish for the company to continue to produce the handlebars at $34each when it can buy them for $31 each.RequiredCalculate the total relevant cost. Do you agree with the president’s conclusion? Per Unit Total Total Relevant Cost
Vernon Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Vernon produces and sells only 6,900 bikes each year. Due to the low volume of activity, Vernon is unable to obtain the economies of scale that larger producers achieve. For example, Vernon could buy the handlebars for $33 each; they cost $36 each to make. The following is a detailed breakdown of current production costs. Item Unit Cost Total Unit-level costs $103,500 82,800 13,800 48,300 Materials $15 Labor 12 Overhead Allocated facility-level costs 2 Total $36 $248,400 After seeing these figures, Vernon's president remarked that it would be foolish for the company to continue to produce the handlebars at $36 each when it can buy them for $33 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Per Unit Total Total relevant cost Do you agree with the president's conclusion?
bright light auto lamps has found that it is indifferent between purchasing a high-capacity vacuum sealing machine or a lower capacity machine as long as sales are above 200 units per month. the price of each sealed beam light is $50. the high-capacity machine has cash expenses of $10,000 per month, while the alternative has cash expenses of $5,000 per month and depreciation and amortisation expenses of $2,000 per month. under high capacity, the variable costs per unit are $10; and they are $40 for the other alternative. if the company bases its decisions on the accounting operating profit break-even, then what are the depreciation expenses under the high-capacity alternative? a. $3,000 b. $4,000 c. $9,000 d. none of the above
Campbell Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high- quality racing bikes with limited sales. Campbell produces and sells only 7,700 bikes each year. Due to the low volume of activity, Campbell is unable to obtain the economies of scale that larger producers achieve. For example, Campbell could buy the handlebars for $33 each; they cost $36 each to make. The following is a detailed breakdown of current production costs. Item Unit Cost Total Unit-level costs $13 $100, 100 92,400 23,100 61,600 Materials Labor 12 Overhead Allocated facility-level costs 8 Total $36 $277,200 After seeing these figures, Campbell's president remarked that it would be foolish for the company to continue to produce the handlebars at $36 each when it can buy them for $33 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Per Unit Total Total relevant cost Do you agree with the president's…
Munoz Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Munoz produces and sells only 7,900 bikes each year. Due to the low volume of activity, Munoz is unable to obtain the economies of scale that larger producers achieve. For example, Munoz could buy the handlebars for $37 each; they cost $40 each to make. The following is a detailed breakdown of current production costs: Item Unit Cost Total Unit-level costs Materials $ 14 $ 110,600 Labor 9 71,100 Overhead 2 15,800 Allocated facility-level costs 15 118,500 Total $ 40 $ 316,000 After seeing these figures, Munoz’s president remarked that it would be foolish for the company to continue to produce the handlebars at $40 each when it can buy them for $37 each. Required Calculate the total relevant cost. Do you agree with the president’s…
Kim Yin Company has 15,000 units in inventory that had a production cost of $3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $23,000and sold for $28,000. Another alternative is to sell the units to a junk dealer for $8,500. Should Kim Yin Company scrap or rework the units? By how much will they be better off? Please provide the answers as well as the solutions to the questions. Thank you!
Adams Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Adams produces and sells only 6,200 bikes each year. Due to the low volume of activity, Adams is unable to obtain the economies of scale that larger producers achieve. For example, Adams could buy the handlebars for $30 each; they cost $33 each to make. The following is a detailed breakdown of current production costs. Item Unit-level costs Materials Labor Overhead Allocated facility-level costs Total Unit Cost $15 9 2 7 $33 Total $ 93,000 55,800 12,400 43,400 $204,600 After seeing these figures, Adams's president remarked that it would be foolish for the company to continue to produce the handlebars at $33 each when it can buy them for $30 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Answer is complete but not entirely correct. Per Unit Total
Benson Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Benson produces and sells only 7,400 bikes each year. Due to the low volume of activity, Benson is unable to obtain the economies of scale that larger producers achieve. For example, Benson could buy the handlebars for $29 each; they cost $32 each to make. The following is a detailed breakdown of current production costs. Item Unit-level costs Unit Cost Total Materials Labor Overhead $ 13 9 $ 96,200 66,600 Allocated facility-level costs Total 2 8 14,800 59,200 $ 32 $ 236,800 After seeing these figures, Benson's president remarked that it would be foolish for the company to continue to produce the handlebars at $32 each when it can buy them for $29 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Per Unit Total Total relevant cost Do you agree with the president's conclusion? No I