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fgiga [73]
3 years ago
9

"in my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said wim niewindt, managing dir

ector of antilles refining, n.v., of aruba. "at a price of $21 per drum, we would be paying $4.70 less than it costs us to manufacture the drums in our own plant. since we use 70,000 drums a year, that would be an annual cost savings of $329,000." antilles refining's current cost to manufacture one drum is given below (based on 70,000 drums per year):
Business
1 answer:
algol133 years ago
6 0

Answer:

In my opinion we ought to stop making our own drums and accept that outside supplier's offer and moreover is discussed below in detail.

Explanation:

1.                                                                          Calculation              Amount ($)

Direct material                                                   75000*10.65               798,750

Direct labor                                                        75000*9*(1-0.25)         506,250

variable overhead                                             75000*1.6(1-0.25)          90,000

Cost of supervision                                                                                   52,500    

rent                                                                                                           157,500

total relevant cost of making                                                               1,605,000  

Less: cost to purchase                                      75000*21                   1,575,000      

Financial Advantages/ {disadvantages}                                                  30,000

2.                                                                      Calculation               Amount ($)

Direct material                                                  87500*10.65              931,875

Direct labor                                                    87500*9*(1-0.25)          590,625                    

variable overhead                                        87500*1.6*(1-0.25)          105,000            

Cost of supervision                                                                                 52,000

rent                                                                                                         157,500

total relevant cost of making                                                              1,837,500

Less: cost to purchase                                  87500*21                      1,837,500                    

Financial Advantages/ {disadvantages}                                                           0    

3.                                                                  Calculation                    Amount ($)

Direct material                                              105000*10.65                  1,118,250

Direct labor                                                   105000*9*(1-0.25)             708,750

variable overhead                                        105000*1.6*(1-0.25)           126,000              

Cost of supervision                                                                                   52,500          

rent                                                                                                           157,500

total relevant cost of making                                                               2,163,000

Less: cost to purchase                                   105000*21                   2,205,000

Financial Advantages/ {disadvantages}                                              *   42,000

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Julli [10]

Answer:

Volume variance    $1,320  Favorable

Explanation:

The fixed overhead volume variance is the difference between the actual and budgeted production unit multiplied by the standard fixed production overhead cost per unit.

Standard fixed overhead cost per unit = $11×6 =  116

                                                                                             Units

Budgeted     units                                                               375

Actual            units                                                              <u>395</u>

Volume variance                                                                  20

Standard fixed overhead cost                                        <u>× $66 </u>

Volume variance                                                              <u>  $1,320   Favorable</u>

                       

3 0
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What is an AA? (From college)
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What percentage of business in America are home businesses?<br> A. 10%<br> B.33%<br> C.52%<br> D.67%
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3 years ago
Read 2 more answers
Venezuela Co. is building a new hockey arena at a cost of $2,500,000. It received a downpayment of $500,000 from local businesse
FromTheMoon [43]

Answer:

cash                             2,011,446 debit

unamortized bond cost  50,000 debit

            bonds payable               2,000,000 credit

            premium on BP                     61,446 credit

--to record issuance--

# Beg. Carrying //cash   // expense //Amortization// End.Carrying Value

1 2,061,446  210,000   206144.57 3855.43  2,057,590

2 2,057,590  210,000  205759.02 -4240.98  2,053,349

3 2,053,349  210,000  205334.93 -4665.07  2,048,684

4 2,048,684  210,000  204868.42 -5131.58  2,043,553

5 2,043,553  210,000  204355.26 -5644.74  2,037,908

Bonds payable          1,000,000 debit

premium on BP              24,342 debit

issuance cost expense 25,000 debit

interest expense           51,217.1  debit

loss at redemption        41.959,9‬ debit

  cash                                                     1,117,500 credit                      

  unarmortized bond issuance cost       25,000 credit

Explanation:

First, we solve the value collected which is the present value of the coupon payment and maturity

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 210,000.000

time 10

rate 0.1

210000 \times \frac{1-(1+0.1)^{-10} }{0.1} = PV\\

PV $1,290,359.0922

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   2,000,000.00

time   10.00

rate  0.1

\frac{2000000}{(1 + 0.1)^{10} } = PV  

PV   771,086.58

PV c  $  1,290,359.0922

PV m  $     771,086.5789

Total  $  2,061,445.6711

Now, we solve for the premium

2,061,446 - 2,000,000 = 61,446 premium

the interst expense will be calcualte as carrying value times market rate

the cash will be the same for every period thus 210,000

Finally, the difference will be the amortizationon the premium

If redem on July 1st 2016 we need to record the interst:

2,048,684 x .05 = 102.434,2/2 = 51.217,1

cash interest: 1,000,000 x 10.5% / 2  = 52,500

<em>Total cash</em>

52,500 interest

<u>1,065,000 bonds </u>

 1,117,500

portion of unamortized cost 25,000

face value 1,000,000

portion of premium: 48,684/2 = 24.342‬

the loss f redemption will be the difference between the interest expense, amoritzation on premiun and write-off of the face value with the amount of cash outlay.

8 0
3 years ago
Perfect competition is characterized by all of the following except A. homogeneous products. B. sellers are price takers. C. hea
Likurg_2 [28]

Answer:

c they don't have enough money

3 0
3 years ago
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