A produce distributor uses 773 packing crates a month, which it purchases at a cost of $11 each. The manager has assigned an annual carrying cost of 33 percent of the purchase price per crate. Ordering costs are $28. Currently the manager orders once a month. How much could the firm save annually in ordering and carrying costs by using the EOQ?

Answer:

486 units

Explanation:

Final answer:

The equivalent units of production for materials is calculated by adding the fully completed units to the proportion of the unfinished units that are complete for materials. Thus, in this case, that would be 450 (completed units) + [60 (ending WIP inventory) * 20% (proportion complete for materials)] = 462.

Explanation:

In the field of cost accounting, equivalent units of production refer to the number of units that could have been completed in a period given the amount of work that was actually done.

In this case, Department 1 transferred out 450 units, and the ending work in progress inventory was 60 units that were 20% complete for materials.

To calculate the equivalent units of production for materials, you need to add the fully completed units to the proportion of the unfinished units that are complete for materials.

Hence, = 450 (completed units) + [60 (ending WIP inventory) * 20% (proportion complete for materials)] = 450 + 12 = 462.

Therefore, the equivalent units of production for materials is 462.

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Answer:

The correct answer to the following question will be Option C.

Explanation:

• Constant cost industries seem to be a sector wherein the proportion of units produced as well as manufacturing costs every unit maintains the very same irrespective including its amount of manufacturing or rise in population. Which doesn't use input data in the appropriate amount to influence the rates of that same components by a shift in industry revenue.
• This doesn't even use inputs in such amounts that perhaps the costs of that same inputs will be influenced by a change in business production.

The other choices are not linked to an industry of this kind. Therefore the clarification above is correct.

Answer:

The correct price per customer is $650

Explanation:

The computation of the correct price is shown below:

= Fixed cost + expected number of customers + net income per customer

where,

Fixed cost per customer = Total cost ÷ (total customers + expected customers)

                = $100,000 ÷ (1,500 + 500)

                = $50

The other values would remain the same

Now put these values to the above formula  

So, the value would equal to

= $50 + $500 + $100

= $650 per customer

Through self-guided internet research, the intellectually curious mind can find many examples of potential rewards in business. Add two (2) or more examples of Business Rewards to this list:

Business Rewards

A deep sense of satisfaction

Being the one in control

Providing sustainable jobs and income for others

The opportunity to give back / community responsibility

The satisfaction of excellent customer feedback

Financial Rewards

After conducting additional research, what other business rewards can you add here?

Answer:

1. Independence and Flexibility

2. Learning opportunities

Explanation:

The rewards of having a business are tremendous and cannot be overemphasized. Hence, asides from the listed business rewards, here are two additional business rewards

1. Independence and Flexibility: One of the rewards of doing business is the independence that comes with it. As the business grows, a business owner gets to have the independence to work whenever he wishes, and have the flexibility of time to be active in business life and other events outside the business.

2. Learning Opportunities: business activities allows business owners to see and learn how certain aspects of the business is getting done. Even when there are employees to perform those functions, business owners still have the opportunity to see, learn, and understand how those activities are being carried out.

Answer:

SecuriCorp

The First level Allocations will be:

Of a total cost of $2,540,000

Travel allocated costs is $915,000

Pick Up and Delivery is $451,000

Customer Service is $690,000

Others is $484,000

Explanation:

the next level of allocation will be to determine the cost rate based on the Activity Measures, however these were not provided in the question

Activity Based Costing is a costing technique that allocates costs based on the activity level of certain pre-determined cost drivers.

Instead of taking the pool of costs and dividing it by Volume to arrive at an Average Costs, Activity Based Costing believes all components leading to the cost generated should bear the burden of the cost by determining the Driver rate per activity.

If from the example we have worked above, we are told the number of miles covered is 20,000 miles and the actual Cost we worked out for Travels was $960,000. This implies we have an activity rate of $48 Per mile covered as travels costs.

The same would apply to Customer Services if for example 3,000 customers were attended to in the period, the Rate Per Customer will become $690,000 divided by 3,000 = $230 Per Customer

With these indices, it is easy to then allocate costs on the basis of miles traveled + Customers Attended to etc

Final answer:

To allocate costs to the activity cost pools, multiply the total costs by the resource consumption percentages provided for each activity.

Explanation:

In order to allocate costs to the activity cost pools, we need to use the distribution of resource consumption percentages provided. Let's calculate the cost allocation for each activity cost pool:

1. Travel cost pool: Multiply total costs by 50% for driver and guard wages, 70% for vehicle operating expense, and 60% for vehicle depreciation.
2. Pickup and Delivery cost pool: Multiply total costs by 35% for driver and guard wages, 5% for vehicle operating expense, and 15% for vehicle depreciation.
3. Customer Service cost pool: Multiply total costs by 10% for driver and guard wages, 0% for vehicle operating expense, and 0% for vehicle depreciation, and 90% for customer representative salaries and expenses.
4. Other cost pool: Multiply total costs by 5% for driver and guard wages, 25% for vehicle operating expense, and 25% for vehicle depreciation, and 10% for customer representative salaries and expenses, and 50% for office expenses, and 35% for administrative expenses.

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Answer and Explanation:

(A) E(P) = (0.6) × ($2800) + (0.4) × ($2250)

= $1680+$900

= $2,580

E(S) = (0.6) × (1.40)+(0.4) × (1.5)

= 0.84 + 0.60

= $1.44

Var(S) = (0.6)(1.40 - 1.44)² + (.4)(1.50 - 1.44)²

= .00096+.00144

= 0.0024.

Cov(P,S) = (0.6)(2800-2580)(1.4-1.44) + (0.4)(2250-2580)(1.5-1.44)

= -5.28-7.92

= -13.20

b = Cov(P,S)/Var(S)

= -13.20/.0024

= -£5,500.

there is a negative exposure.  as the pound gets stronger/weaker against the dollar the dollar value of british holding goes higher.

(B)  b²Var(S) = (-5500)²(.0024) = 72,600($)²

(C). i would Buy 5,500 forward to hedge exchange risk exposure. By doing this, i can eliminate the volatility of the dollar value of your British asset that is due to the volatility of the exchange rate

Final answer:

The exposure to exchange risk is the difference between the expected dollar value and the current dollar value due to changes in the economy and exchange rate. Variance of the dollar value of the property is calculated factoring in the probabilities of the economic scenarios. Hedging such as use of a forward contract provides certainty by eliminating exchange risk, but it can also limit potential profit.

Explanation:

The exposure to the exchange risk can be estimated by calculating the expected dollar value of the property. If the economy booms, the expected value will be £2,000 * $1.40 = $2800, and if it slows down, it will be £1,500 * $1.50 = $2250. The expected dollar value is then: 0.60 * $2800 + 0.40 * $2250 = $1680 + $900 = $2580. The exchange risk exposure b is the difference between the expected dollar value and the current dollar value of the property.

The variance of the dollar value of your property attributable to the exchange rate uncertainty can be computed as: 0.60 * ($2800 - $2580)² + 0.40 * ($2250 - $2580)².

To hedge your exchange risk exposure, you can enter into a forward contract to sell pounds for dollars at a predetermined rate. This will eliminate exchange rate risk but it could also limit your potential for profit if the pound appreciates more than expected against the dollar. Thus, hedging has the consequence of providing certainty while potentially sacrificing profit.

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