Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Chapter 16, Problem 16.9E
Exercise 16.9
LO 2, 3
Sell or process further? American Chemical Company manufactures a chemical compound that is sold for $29 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $36 per gallon. American expects the market for the new compound variant to be 5,000 gallons initially and determines that
Required:
Should American produce the new’ compound variant? Explain your answer.
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Question 45
Assume a division of HP Inc currently makes 50,000 circuit boards per year used in producing diagnostic electronic instruments at the cost of 150 per board, considering of variable
costs per unit of $35 and feed costs per unit of $15. Further, assume Sarmina Corporation offers to sell HP the 50.000 circuit boards for $50 each if HP accepts this offer the
facilities currently used to make the boards could be rented to one of HP's suppliers for $75,000 per year. In addition, $8 per unit of the fixed overhead applied to the circuit boards
would be totally eliminated.
Should HP outsource this component from Sanmina Corporation Support your answer with relevant cost calculations. Make-or-Buy) Decision.
10
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It costs Concord Company $26 per unit ($18 variable and $8 fixed)
to produce its product, which normally sells for $38 per unit. A
foreign wholesaler offers to purchase 6400 units at $21 each.
Concord would incur special shipping costs of $2 per unit if the
order were accepted. Concord has sufficient unused capacity to
produce the 6400 units. If the special order is accepted, what will
be the effect on net income?
O $6400 decrease
O $19200 increase
O $115200 increase
O $6400 increase
question 20
Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is
$2.75 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a
$50,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates:
• Marketing: Once the XC-750 is operational next year, the extra capacity is expected to generate $10.00 million per year in additional sales, which will continue for the 10-year life of the machine.
• Operations: The disruption caused by the installation will decrease sales by
$5.00 million this year. As with Billingham's existing products, the cost of goods for the products produced by the XC-750 is expected to be
70% of their sale price. The increased production will also require increased inventory on hand of $1.00 million during the life of the project, including…
Chapter 16 Solutions
Accounting: What the Numbers Mean
Ch. 16 - Prob. 16.1MECh. 16 - Prob. 16.2MECh. 16 - Mini-Exercise 16.3 LO 2. 3 The make or buy...Ch. 16 - Prob. 16.4MECh. 16 - Mini-Exercise 16.5 LO 7 Net present ratio and IRR...Ch. 16 - Mini-Exercise 16.6 LO 9. 10 Payback period and...Ch. 16 - Exercise 16.7 LO 1 Application of cost terminology...Ch. 16 - Prob. 16.8ECh. 16 - Exercise 16.9 LO 2, 3 Sell or process further?...Ch. 16 - Exercise 16.10 LO 2. 3 Sell or process further?...
Ch. 16 - Exercise 16.11
LO 2 , 3
Accept special sales...Ch. 16 - Exercise 16.12
LO 2, 3
Accept special sales order?...Ch. 16 - Prob. 16.13ECh. 16 - Exercise 16.14
LO 2, 3
Target costing Rainbow...Ch. 16 - Exercise 16.15
LO 2. 3
The make or buy decision...Ch. 16 - Exercise 16.16
LO 2, 3
The make or buy decision...Ch. 16 - Prob. 16.17ECh. 16 - Prob. 16.18ECh. 16 - Prob. 16.19ECh. 16 - Prob. 16.20ECh. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.26ECh. 16 - Prob. 16.27PCh. 16 - Problem 16.28 LO 2, 3 Relevant costs, special...Ch. 16 - Problem 16.29 LO 2, 3 Continue or discontinue a...Ch. 16 - Prob. 16.30PCh. 16 - Prob. 16.31PCh. 16 - Prob. 16.32PCh. 16 - Prob. 16.33PCh. 16 - Prob. 16.34PCh. 16 - Prob. 16.35PCh. 16 - Prob. 16.36PCh. 16 - Prob. 16.38CCh. 16 - Capital budget expenditure analysis: Internet...
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