How much cost does Metlock-T have tied up in each of these T-shirts? If it normally sells these shirts for $14 to the retailer, how much gross margin per unit does it generate on these sales? (Round answers to 2 decimal places, e.g. 15.25.) Total cost Gross margin $ $ /unit /unit At the end of October, Karen lamented the company's situation: in the middle of production of Metlock-T's most popular long-sleeve T-shirt, the company ran out of its usual collars, purchased from one main supplier. That supplier was also sold out. Metlock-T could get a slightly different premade collar, from a new supplier, at the same cost. So Karen went ahead with the order, hoping it wouldn't delay production or affect the quality of the shirts. As it turned out, the new collars failed Metlock-T's quality control testing. Stuck with unwearable T-shirts, the company was also in a bind with its retail outlets, which wanted more shirts to sell! The costs to produce this most recent batch of shirts is as follows. Direct material Direct labor Manufacturing overhead Total costs Volume in batch $66,000 35,000 15,000 $116,000 20,000
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- Current Attempt in Progress At the end of October, Debra lamented the company's situation: in the middle of production of Blossom-T's most popular long-sleeve T-shirt, the company ran out of its usual collars, purchased from one main supplier. That supplier was also sold out. Blossom-T could get a slightly different premade collar, from a new supplier, at the same cost. So Debra went ahead with the order, hoping it wouldn't delay production or affect the quality of the shirts. As it turned out, the new collars failed Blossom-T's quality control testing. Stuck with unwearable T-shirts, the company was also in a bind with its retail outlets, which wanted more shirts to sell! The costs to produce this most recent batch of shirts is as follows. Direct material $75,000 Direct labor Manufacturing overhead Total costs 29,000 15,000 $119,000 Volume in batch 20,000I keep working this problem over and over and been working on it but cant seem to get it right [The following information applies to the questions displayed below.] Hult Games buys electronic components for manufacturing from two suppliers, Milan Components and Dundee Parts. If the components are delivered late, the shipment to the customer is delayed. Delayed shipments lead to contractual penalties that call for Hult to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following. Milan Dundee Total Total purchases (cartons) 98,000 42,000 140,000 Average purchase price (per carton) $ 20.00 $ 22 $ 20.60 Number of deliveries 80 20 100 Percentage of late deliveries 25 % 10 % 22 % The Accounting Department recorded $602,700 as the cost of late deliveries to customers. Required: Assume that the average quality,…LL is a company that makes and sells clothing made out of wool. It has been having problems manufacturing sufficient garments for its customers for several years as demand has increased significantly. LL's current wool spinning process has been identified as a bottleneck process.It is considering the purchase of an automated spinning machine that it believes will significantly improve the speed of its manufacturing process. In addition it will allow LL to lay off around fifty members of staff (who are heavily unionised).The machine will cost around $5m. LL does not have this cash available, but believes that it will be able to raise these funds from its investors.LL will only purchase the machine if it is: suitable acceptable; AND feasible From the information given above, which of these three criteria does the acquisition of the machine meet? Suitable and acceptable only Suitable only Acceptable and feasible only Suitable and feasible only
- The demand for cocoa butter hand lotion, one of numerous products manufactured by Smooth Skin Care Products Inc., has dropped sharply because of recent competition from a similar product. The controller has been asked by the president of the company for advice on whether to continue production during the following month or to suspend the manufacture of cocoa butter hand lotion until a strategy to regain market share. The controller has assembled the following pertinent data: Smooth Skin Care Products Inc. Income Statement - Cocoa Butter Hand Lotion For the Month Ended January 31 Financial Categories Sales (400,000) Cost of goods sold Gross profit Dollar Amount $ 32,200,000 $28,330,000 $ 3,870,000 Selling and admin expenses Loss from operations $ 4,270,000 $ (400,000) The production costs and selling and administrative expenses, based on the production of 400,000 units in the Income Statement above, are as follows: Direct materials Category Dollar Amount $16 per unit 17 per unit Direct…Jackie Iverson was furious. She was about ready to fire Tom Rich, her purchasing agent. Just a month ago, she had given him a salary increase and a bonus for his performance. She had been especially pleased with his ability to meet or beat the price standards. But now, she found out that it was because of a huge purchase of raw materials. It would take months to use that inventory, and there was hardly space to store it. In the meantime, space had to be found for the other materials supplies that would be ordered and processed on a regular basis. Additionally, it was a lot of capital to tie up in inventorymoney that could have been used to help finance the cash needs of the new product just coming online. Her interview with Tom was frustrating. He was defensive, arguing that he thought she wanted those standards met and that the means were not that important. He also pointed out that quantity purchases were the only way to meet the price standards. Otherwise, an unfavorable variance would have been realized. Required: 1. CONCEPTUAL CONNECTION Why did Tom Rich purchase the large quantity of raw materials? Do you think that this behavior was the objective of the price standard? If not, what is the objective(s)? 2. CONCEPTUAL CONNECTION Suppose that Tom is right and that the only way to meet the price standards is through the use of quantity discounts. Also, assume that using quantity discounts is not a desirable practice for this company. What would you do to solve this dilemma? 3. CONCEPTUAL CONNECTION Should Tom be fired? Explain.Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon Hessel Total Total purchases (cartons) 5,000 3,000 8,000 Average purchase price (per carton) $ 170 $ 186 $ 176 Number of deliveries 40 20 60 Percentage of cartons delivered late. 30% 15% 25% The Accounting Department recorded $243,750 as the cost of late deliveries to customers. Required: Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. Also…
- Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon 5,000 $ 192 40 30% Bacon Hessel Hessel 3,000 $ 208 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. The Accounting Department recorded $265,200 as the cost of late deliveries to customers. Effective Cost Per Carton Total 8,000 $ 198 20 15% Required: Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the…Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon 5,000 $ 182 40 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. 30% Bacon Hessel Hessel 3,000 $198 20 15% The Accounting Department recorded $255,450 as the cost of late deliveries to customers. Effective Cost Per Carton Total 8,000 $ 188 60 25% Exercise 10-38 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Required: Assume that the average quality, measured by the percentage of…Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon Hessel Total Total purchases (cartons) 5,000 3,000 8,000 Average purchase price (per carton) $ 176 $ 192 $ 182 Number of deliveries 40 20 60 Percentage of cartons delivered late. 30% 15% 25% The Accounting Department recorded $249,600 as the cost of late deliveries to customers. Exercise 10-38 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Required: Assume that the average quality, measured by the percentage of late…
- Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special order for 4,600 pairs of weight-lifting gloves. Feinan Sports was not operating at capacity and could use the extra business. Unfortunately, the order’s offering price of $12.80 per pair was below the cost to produce them. The controller was opposed to taking a loss on the deal. However, the personnel manager argued in favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a pair of weight-lifting gloves is presented below. Direct materials $ 7.50Direct labor 3.90Variable overhead 1.60Fixed overhead 3.10Total $16.10 No variable selling or administrative expenses would be associated with the order. Non-unit- level activity costs are a small percentage of total costs and are therefore not considered.…Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. Anational sporting goods chain recently submitted a special order for 4,000 pairs of weight-liftinggloves. Feinan Sports was not operating at capacity and could use the extra business.Unfortunately, the order’s offering price of $12.70 per pair was below the cost to produce them.The controller was opposed to taking a loss on the deal. However, the personnel manager arguedin favor of accepting the order even though a loss would be incurred; it would avoid the problemof layoffs and would help maintain the community image of the company. The full cost toproduce a pair of weight-lifting gloves is presented below.Direct materials $ 7.40Direct labor 3.80Variable overhead 1.60Fixed overhead 3.10 Total $15.90No variable selling or administrative expenses would be associated with the order. Non-unitlevel activity costs are a small percentage of total costs and are therefore not considered.Required:1. Assume…Consider each of the following independent scenarios:a. Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed hishair back and sighed. December had been a bad month. Two machines had broken down,and some factory production workers (all on salary) were idled for part of the month.Materials prices increased, and insurance premiums on the factory increased. No way outof it; costs were going up. He hoped that the marketing vice president would be able topush through some price increases, but that really wasn’t his department.b. Joanna Pauly was delighted to see that her ROI figures had increased for the third straightyear. She was sure that her campaign to lower costs and use machinery more efficiently(enabling her factories to sell several older machines) was the reason why. Joanna plannedto take full credit for the improvements at her semiannual performance review.c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo…