Required: 1. Determine the company's cost of technical support per customer service call. 2. During the month of January, Aziz received 570 calls for customer service on its deluxe model customer service on its basic model. Assign technical support costs to each model using activity- (ABC). Assign technical support costs to each model Model Activity Rate Deluxe Cost driver quantity incurred Allocated Cost

Required: 1. Determine the company's cost of technical support per customer service call. 2. During the month of January, Aziz received 570 calls for customer service on its deluxe model customer service on its basic model. Assign technical support costs to each model using activity- (ABC). Assign technical support costs to each model Model Activity Rate Deluxe Cost driver quantity incurred Allocated Cost

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

See similar textbooks

Similar questions

Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,000 for the Sleepeze, 12,000 for the Plushette, and 5,000 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: a. Salaries for his office (including himself at 65,000, a marketing research assistant at 40,000, and an administrative assistant at 25,000) are budgeted for 130,000 next year. b. Depreciation on the offices and equipment is 20,000 per year. c. Office supplies and other expenses total 21,000 per year. d. Advertising has been steady at 20,000 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign. e. Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores. f. Last year, shipping for the Sleepeze and Plushette lines averaged 50 per unit sold. Gene expects the Ultima line to ship for 75 per unit sold since this model features a larger mattress. Required: 1. Suppose that Gene is considering three sales scenarios as follows: Prepare a revenue budget for the Sales Division for the coming year for each scenario. 2. Prepare a flexible expense budget for the Sales Division for the three scenarios above.
Olin Company manufactures and distributes carpentry tools. Production of the tools is in the mature portion of the product life cycle. Olin has a sales force of 20. Salespeople are paid a commission of 7 percent of sales, plus expenses of 35 per day for days spent on the road away from home, plus 0.50 per mile. They deliver products in addition to making the sales, and each salesperson is required to own a truck suitable for making deliveries. For the coming quarter, Olin estimates the following: On average, a salesperson travels 6,000 miles per quarter and spends 38 days on the road. The fixed marketing and administrative expenses total 400,000 per quarter. Required: 1. Prepare an income statement for Olin Company for the next quarter. 2. Suppose that a large hardware chain, MegaHardware, Inc., wants Olin Company to produce its new SuperTool line. This would require Olin Company to sell 80 percent of total output to the chain. The tools will be imprinted with the SuperTool brand, requiring Olin to purchase new equipment, use somewhat different materials, and reconfigure the production line. Olins industrial engineers estimate that cost of goods sold for the SuperTool line would increase by 15 percent. No sales commission would be incurred, and MegaHardware would link Olin to its EDI system. This would require an annual cost of 100,000 on the part of Olin. MegaHardware would pay shipping. As a result, the sales force would shrink by 80 percent. Should Olin accept MegaHardwares offer? Support your answer with appropriate calculations.
Alard Manufacturing Company has a billing department staffed by four billing clerks. Each clerk is paid 32,000 per year and is able to process 8,000 bills. Last year, 27,360 bills were processed by the four agents. Calculate the unused capacity in terms of number of bills. a. 27,360 b. 4,640 c. 8,000 d. 32,000
Qinto Company sells two types of products, basic and deluxe. The company provides technical support for users of its products at an expected cost of $250,000 per year. The company expects to process 10,000 customer service calls per year. 1. Determine the company’s cost of technical support per customer service call. 2. During the month of January, Qinto received 650 calls for customer service on its deluxe model and 150 calls for customer service on its basic model. Assign technical support costs to each model using activity-based costing (ABC).
Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Caldwell buys 100, 100 units at an average unit cost of $11 and sells them at an average unit price of $21. The firm also has fixed operating costs of $250,100 for the year. Caldwell's customers are demanding a 11% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 3% discount. Required: Caldwell has estimated that it can reduce the number of purchase orders to 690 and can decrease the cost of each shipment by $4 with minor changes in its operations. Any further cost savings must come from reengineering the warehousing processes. What is the maximum cost (i.e., target cost) for warehousing if the firm desires to earn the same amount of profit next…
Sleepwell LLC has entered into a contract to supply 50,000 units of sleeping mattes to customer on sale or return basis at OMR 60 each. The cost of making each sleeping mattress is 32 OMR. The term of sales provides three months to customer for the date of sale to return the items and get a full refund. The experience indicates that such customer tends to return back some items and it can be reliably estimated to be around 8% of such sold items are usually returned. find right of return assets. OMR 3,000,000 OMR 240,000 None of them OMR 128,000 Solve PC issues 1 important messag 3 total messages 03:43 EN
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays set up cost equal to $20 for each battery and estimates that the annual holding cost is $8.4. The working days for the company are 300 days per year Determine the economic order quantity (EOQ)
A manufacturer has a production facility that requires 19,111 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 6 days. The unit purchase cost is $12.8 per unit. The cost to place and process an order from the supplier is $113 per order. The unit inventory carrying cost per year is 20 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the manufacturer? Use at least 4 decimal places.
A carton manufacturer produces two sizes of carton for a fortune 100 logistics company. The logistics company has agreed to buy the cartons for next 12 months. The carton manufacturer now has tasked their operations manager to identify the number of cartons to produce for each size to achieve maximum revenue. When sold to the logistics company, carton A5 sells for 6 dollars a piece and carton C5 sells for 8 dollars a piece. The carton manufacturer has a labor hours capacity of 8,300 hours and budget for raw material limited to $ 185,580. Carton A5 utilizes 0.09 hours of labor and $2 of material cost per piece whereas, carton C5 utilizes 0.12 hours of labor and $2.75 of material cost per piece. Formulate a LP model and solve in excel solver to calculate the optimal quantities of each type leading to maximizing the revenue and satisfying all constraints.
A manufacturer has a production facility that requires 14,979 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 14 days. The unit purchase cost is $27 per unit. The cost to place and process an order from the supplier is $172 per order. The unit inventory carrying cost per year is 17 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal length of inventory cycle in days? Use at least 4 decimal places.
Advance Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Advance Auto’s generator production operation, which is operated at a constant rate will require 1000 components per month throughout the year (12,000 units annually). Assume the ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Advance Auto has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: What is the EOQ for this component? What is the reorder point? What is the cycle time? What are the total annual holding and ordering costs associated with your recommended EOQ?