BUSINESS COLLEGE

It costs Vaughn 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 4800 units at $21 each. Vaughn would incur special shipping costs of $2 per unit if the order were accepted. Vaughn has sufficient unused capacity to produce the 4800 units. Required:
(a) If the special order is accepted, what will be the effect on net income?

Answers

Answer 1
Answer:

Answer:

Effect on income= $4,800 increase

Explanation:

Giving the following information:

Unitary variable cost= $18

A foreign wholesaler offers to purchase 4800 units at $21 each. Vaughn would incur special shipping costs of $2 per unit if the order were accepted.

Because it is a special order and there is unused capacity, we will not take into account the fixed costs.

Effect on income= 4,800*21 - 4,800*(18 + 2)= $4,800 increase

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The Work-in-Process inventory account of a manufacturing firm shows a balance of $3,960 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $640 and $440 for materials, and charges of $540 and $740 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:

Answers

Answer: 125%

Explanation:

Manufacturing overhead = Predetermined overhead rate * Direct labor

Manufacturing Overhead

= Work in process balance - Direct labor - Direct materials

= 3,960 - 640 - 440 - 540 - 740

= $1,600

The rationale behind the above is that that the Work in process account is made up of Direct labor, material and overhead. The Overhead would therefore be the balance less the Direct material and labor.

Direct Labor = 540 + 740

= $1,280

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Answers

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Answers

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Best Brands Appliance Mart is getting ready for its annual Labor Day sale. There are two Best Brands stores, one in midtown Manhattan and another in Amityville. Merchandise is stored in two warehouses, one in Brooklyn and one in Baldwin. From experience in past years, the owners know the big mover during the sale is tablets. The Manhattan store needs 500, while the Amityville store will require 400. Each warehouse has 600 tablets in stock. It costs $1 and $2 to ship a tablet from Brooklyn to Manhattan and to Amityville, and $2 and $4 to ship one from Baldwin to Manhattan and Amityville. What is the best shipping strategy for getting the tablets from the warehouses into the stores to minimize the shipping cost?

Answers

Answer:

Explanation:

From the given information:

Assuming we represent x to be the tablets sent from Brooklyn to Manhattan

Thus, (500 - x) to be the tablets sent from Baldwin to Manhattan

Also, suppose we represent y to be the tablets sent from Brooklyn to Amityville

It implies that (400 - x) to be the tablets sent from Baldwin to Amityville

∴

x ≥ 0 ; y ≥ 0  

⇒   500 - x ≥ 0  & 400 - y ≥ 0

The Shipping cost Z = 1(x) + 2(500-x) + 2(y) + 4(400-y)

Z = x + 1000 - 2x + 2y + 1600 - 4y

Z = x -2y + 2600

To minimize the shipping cost:

\left \{ 500-x \geq 0 \ \implies \ x\leq 500}} \atop {400-y \geq 0 \ \implies \ y\leq 400}} \right.

Thus, by replacing the coordinate values (x,y) into Z, we have:

Point    Coordinates(x,y)    Value of Z (shipping cost)

0             (0,0)                             0

A             (0,400)                     1800

B             (500,400)                 1300

C             (500,0)                      2100

Hence, the minimum cost is 1300.

x = 500 units   and  y = 400 units

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Answers

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Answers

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