1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
DochEvi [55]
3 years ago
14

Two different manufacturing processes are being considered for making a new product. The first process is less capital-intensive

, with fixed costs of only $50,000 per year and variable costs of $700 per unit. The second process has fixed costs of $400,000 but has variable costs of only $200 per unit. a. What is the break-even quantity beyond which the second process becomes more attractive than the first
Business
2 answers:
daser333 [38]3 years ago
8 0

Answer:

700 units

Explanation:

fixed cost for first process ( F₁ ) = $50000

variable costs of first process ( V₁ ) = $700

fixed cost of second process ( F₂ ) = $400000

variable cost of second process ( V₁ ) = $200

break-even quantity ( y ) = ?

note : variable costs are costs that vary/change as the quantity of goods and services produced changes

A) the break-even quantity beyond which the second process can be calculated by equating the total costs of both processes

F₁ + V₁ ( y ) = F₂ + V₂( y )

50000 + 700 y = 400000 + 200 y

500 y = 400000 - 50000

therefore y = 700 ( break even quantity beyond which the second process is attractive )

baherus [9]3 years ago
7 0

Answer:

700 units

Explanation:

FC1 : Fixed Costs from process 1

VC1 : Variable cost per unit from process 1

FC2 : Fixed Costs from process 2

VC2 : Variable cost per unit from process 2

FC1 = $50,000

VC1 = $700 per unit

FC2 = $400,000

VC2 = $200 per unit

To calculate the break-even (quantity) point we must equate the TC1 (Total cost of process 1) to TC2 (Total cost of process 2)

TC1 = TC2

FC1 + VC1(y) = FC2 + VC2(y)      where y is the break-even units

50,000 + 700y = 400,000 + 200y

500y = 350,000

y = 350,000 / 500

y = 700 Units

You might be interested in
At Davide Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. O
soldi70 [24.7K]

Answer and Explanation:

For materials

Equivalent completed units = Completed units + WIP ending

= 111,700 + 20,300

= 132,000 units

Cost of materials = Beginning WIP + Cost of materials added

= 22,300 + 370,000

= $392,300

Cost of material per units = 392,300 ÷ 132,000

= $2.97197

For conversions

Equivalent completed units = Completed units + WIP ending

= 111,700 + 20,300 × 30%

= 117,790 units

Cost of Conversion = Beginning WIP + Cost of conversion added

= 19,700 + 280,000

= $299,700

Cost of conversion per units = 299,700 ÷ 117,790

= $2.54436

Total cost of units completed and transferred out

= 111,700 × (2.97197 + 2.54436)

= $616,174

4 0
2 years ago
Sophia Company purchased equipment costing $120,000. The equipment has a residual value of $20,000 and an estimated useful life
mixer [17]

Answer:

Year 1 : $20000

Year 2 : $460000

Explanation:

Year 1 calculation:

120000-20000/50000*10000 =$20000

Year 2 calculation:

120000-20000/50000*23000=$46000

8 0
2 years ago
The 10-year bond of Crown Electronics is selling at $960 each. The bond has a coupon rate of 8% and par value of $1,000. The fir
stich3 [128]

Answer: 5.36%

Explanation:

The after-tax cost of debt refers to the interest that is paid on debt which is then less the income tax savings as a result of the deductible interest expenses.

When calculating the after-tax cost of debt, the effective tax rate of a company should be subtracted from 1, after which the difference will be multiplied by the cost of debt. This will therefore be:

= Rate (10,8% × 1000, -960 + 20, 1000) × (1-40%)

=5.36%

6 0
2 years ago
On March 15, American Eagle declares a quarterly cash dividend of $0.095 per share payable on April 13 to all stockholders of re
irinina [24]

Answer:

March 15,

Dr. Dividend                $20,520,000

Cr. Dividend Payable $20,520,000

April 13,

Dr. Dividend Payable $20,520,000

Cr. Cash                      $20,520,000

Explanation:

A dividend is announced and paid after some days, so the journal entries for both event will be recorded separately.

At The time of Declaration no payment is made, only a liability is created against the dividend payment.

Dividend Value = $0.095 x 216,000,000 shares =  $20,520,000

Payment will be made by debiting the dividend payable account to adjust the liability account and Crediting cash for the payment of cash dividend.

8 0
3 years ago
Marciano Manufacturing uses a standard cost system. Standards for direct materials are as​ follows: Direct materials​ (pounds pe
kondor19780726 [428]

Answer:

Debit Raw Materials Inventory  with $72,000; Credit Direct materials Cost Variance  with 28,200, and Credit Accounts Payable  with $43,800.

Explanation:

Direct materials purchase on account =  $43,800

Standard cost of direct materials = 12,000 * $6 = $72,000

Direct materials cost variance = $72,000 - $43,800 = $28,200

The journal entries will therefore be as follows:

<u>Details                                                Dr ($)                 Cr ($)        </u>

Raw Materials Inventory                   72,000

Direct materials Cost Variance                                   28,200

Accounts Payable                                                        43,800

<em><u>To record direct materials cost and variance.                                </u></em>

7 0
3 years ago
Other questions:
  • Calculation of Cost of Goods Sold: Periodic Inventory System with Sales Returns and Allowances
    12·1 answer
  • The XYZ car manufacturing company is advertising its new hybrid vehicle. It understands that its competition, Toyota's hybrid ca
    13·1 answer
  • ​if a certain country considered handshakes in business transactions to be taboo and preferred to use nodding, this would be an
    5·1 answer
  • Suppose the real risk-free rate is 3.00%, the average expected future inflation rate is 5.90%, and a maturity risk premium of 0.
    13·1 answer
  • Explain why the marginal rate of technical substitution is likely to diminish as more and more labor is substituted for capital.
    12·1 answer
  • You are caring for a 69-year-old man with congestive heart failure. His breathing is profoundly labored, his oxygen saturation r
    8·1 answer
  • Match the role with the correct example of someone playing that role.
    6·2 answers
  • A software start up is pitching to raise money to write code and they need a team of 4/4 for two years and each color cost 100,0
    12·1 answer
  • Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $5,000 under each of the fol
    13·1 answer
  • Most economists believe the principle of monetary neutrality is a. relevant to both the short and long run. b. mostly relevant t
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!