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Alchen [17]
3 years ago
5

GV is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every Decembe

r, GV sends out a short survey to their customers, asking for the information required for preparing the tax statements. Based on 50 years of experience, GV categorizes their cases into the following two groups:
i. Group 1 (new customers): 20% of cases
ii. Group 2 (repeat customers): 80% of cases
This year, there are 50 income tax statements arriving each week. In order to prepare the income tax statement, GV has three resources. The activities are carried out by the following three persons:
i. An administrative support person that processes every tax statement.
ii. Senior accountant (who is also the owner): who processes only tax statements for new customers
iii. Junior accountant: who only processes tax statements for repeat customers.
Processing times for both groups and all resources are shown in the table below. Assume that everyone works 40 hours per week.
Group Administrator [min/unit] Handling by senior accountant
[min/unit] Handling by junior accountant
[min/unit]
1 20 40 n/a
2 20 n/a 15
Required:
a. Which of the three persons is the bottleneck?
O Administrator
O Senior accountant
O Junior accountant
b. For a mix of 20:80 between new and old cases, what is the flow rate for new customers?
c. For a mix of 20:80 between new and old cases, what is the flow rate for repeat customers?
d. For a mix of 20:80 between new and old cases, what is the capacity for new customers?
e. For a mix of 20:80 between new and old cases, what is the capacity for repeat customers?
Business
1 answer:
svp [43]3 years ago
7 0

Answer:

a. To find bottleneck resource, we need to determine the utilization of each resource

Processing capacity of Administrator = Available time per week / Processing time = 40*60/20 = 120 cases per week

There are 50 cases per week. So utilization of Administrator = 50/120 = 41.7%

Processing capacity of Senior accountant = 40*60/40 = 60 cases per week.

New cases are 20% of 50 cases per week Therefore utilization of Senior accountant = 20%*50/60 = 16.7%

Processing capacity of Junior accountant = 40*60/15 = 160 cases per week.

Repeat cases are 80% of 50 cases per week Therefore utilization of Junior accountant = 80%*50/160 = 25%

Utilization of Administrator is maximum. Therefore it is the bottleneck resource for 20:80 mix of New and Repeat cases.

b. Flow rate of New cases per week = 50*20% = 10 cases per week

c. Flow rate of Repeat cases per week = 50*80% = 40 cases per week

d. In (a) we have seen that for 20:80 mix between new and repeat cases, Administrator is the bottleneck resource with a capacity of 120 cases per week. Therefore capacity for new cases = 120*20% = 24 per week

e. Capacity for Repeat customers = 120*80% = 96 per week

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Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all produc
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Answer:

<u><em>Part a </em></u>

<u>Belmain Co.</u>

<u>Estimated Income statement for the year ended 2017.</u>

Sales ($240 x 12,000)                                                               $2,880,000

<u>Less Variable Costs :</u>

Direct Materials ($50.00 x 12,000)                                           ($600,000)

Direct Labor ($30.00 x 12,000)                                                 ($360,000)

Factory Overheads ($6.00 x 12,000)                                          ($72,000)

Sales Salaries and Commissions ( $4.00 x 12,000)                  ($48,000)

Miscellaneous selling expenses ( $1.00 x 12,000)                     ($12,000)

Supplies ($4.00 x 12,000)                                                           ($48,000)

Miscellaneous administrative expenses ($1.00 x 12,000)         ($12,000)

Contribution                                                                               $1,728,000

<u>Less Fixed Expenses :</u>

Factory overhead                                                                     ($350,000)

Sales salaries and commissions                                             ($340,000)

Advertising                                                                                 ($116,000)

Travel                                                                                            ($4,000)

Miscellaneous selling expense                                                   ($2,300)

Office and officers’ salaries                                                    ($325,000)

Supplies                                                                                        ($6,000)

Miscellaneous administrative expense                                      ($8,700)

Net Income ( Loss)                                                                     $576,000

<u><em>Part b</em></u>

0.6 or 60 %

<u><em>Part c</em></u>

Break-even sales (units) = 8,000

Break-even sales (dollars) = $1,920,000

<u><em>Part d</em></u>

<em>See attachment </em>

<u><em>Part e</em></u>

Margin of safety in dollars  =    $960,000

Margin of safety in percentage  =  33.3 %

<em><u>Part f</u></em>

Operating Leverage = 3.00

Explanation:

<u>Income Statement :</u>

<em>Sales - Expenses = Income</em>

Note : I have separated Variable and Fixed Expenses

<u>Contribution Margin ratio :</u>

<em>Contribution Margin ratio = Contribution ÷ Sales</em>

                                          =  $1,728,000  ÷  $2,880,000

                                          = 0.6 or 60 %

<u>Break-even sales ( units and dollars) :</u>

<em>Break-even sales (units) = Fixed Costs ÷ Contribution per unit</em>

                                        = $1,152,000 ÷ $144.00

                                        = 8,000

<em>Break-even sales (dollars) = Fixed Costs ÷ Contribution margin ratio</em>

                                            = $1,152,000 ÷ 0.60

                                            = $1,920,000

<u>Margin of safety in dollars and as a percentage of sales :</u>

<u />

<em>Margin of safety in dollars  = Expected Sales (dollars) - Break-even sales (dollars)</em>

                                             =  $2,880,000 - $1,920,000

                                             =   $960,000

<em>Margin of safety in %       = (Expected Sales  - Break-even sales ) ÷ Expected Sales</em>

                                             = $960,000 ÷ $2,880,000

                                             = 33.3 %

<u>Operating leverage</u>

<em>Operating Leverage = Contribution ÷ Earnings Before Interest and Tax</em>

                                  =  $1,728,000 ÷ $576,000

                                  = 3.00

3 0
2 years ago
A new tax on gasoline causes a reduction in the purchase of new vehicles with poor fuel economy. This is an example of what type
Ugo [173]

Answer:

Option (C) is correct.

Explanation:

Negative Indirect.

This is due to the indirect affect of tax on the purchase of new vehicle because a new tax on gasoline reduces the consumers incentive to the buy the new vehicles. Therefore, it is a negative indirect incentive.

Also, there is a fall in the number of cars or vehicles purchased because of the tax imposed on the gasoline.

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3 years ago
Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all spri
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Answer:

Waterways Corporation

If Waterways begins mass-producing its special-order sprinklers, its net operating income would almost double, increasing by $680,202.

Explanation:

a) Data and Calculations:

Increase in variable costs per unit = $0.70

Increase in number of sprinklers sold = 10%

Increase in average sales price = $0.20

Current sales = 481,000 sprinkler units

Selling price = $25.20

New selling price = $25.40 ($25.20 + $0.20)

New quantity of sprinkler units = 529,100 (481,000 * 1.1)

Increase in variable cost = $370,370 (529,100 * $0.70)

New variable cost = $6,181,530 ($5,811,160 + $370,370)

Income Statements                          Normal    Mass Production

Sales revenue                              $12,121,200   $13,439,140

Variable manufacturing costs       $5,811,160     $6,181,530

Variable selling and admin. costs 2,673,680      2,941,048

Total variable costs                     $8,484,840    $9,122,578

Contribution margin                   $3,636,360    $4,316,562

Fixed costs:

Manufacturing costs                  $2,155,660    $2,155,660

Selling and administrative costs     798,370         798,370

Total fixed costs                        $2,954,030   $2,954,030

Net operating income                  $682,330    $1,362,532

Increase in net operating income = $680,202 ($1,362,532 - $682,330)

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