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mrs_skeptik [129]
3 years ago
12

Playful Pens, Inc., makes a single model of a pen. The cartridge for the pen (which contains the ink) is manufactured on one mac

hine. The cartridge holder (which you hold when you use the pen)is manufactured on another machine. Monthly capacities and production levels are as follows:
Machine 1 (Cartridge) Machine 2 (Holders)
Monthly capacity 1,000,000 800,000
Monthly production 800,000 800,000
The company could sell 1,000,000 pens per month. The units (cartridge inside of holder) sell for $10.40 each and have a variable cost of $4.10 each. Fixed costs are $4,200,000 per month.
Required:
a. Is there a bottleneck at Playful Pens on Machine 1 or Machine 2?
A. Machine 1
B. Machine 2
b. Playful Pens's production supervisors state they could increase machine 2's capacity by 200,000 per month by producing holders on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $1.10 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $820,000 per month.
b-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
Differential Revenues
Differntial costs:
Variable
Fixed
b-2. Should Playful Pens produce holders on the weekend?
Yes
No
c. Independent of the situation in requirement (b), Playful Pens could expand the capability of machine 2 by adding additional workers to perform ongoing maintenance. This would increase its capacity by 100,000 holders per month. This would not affect sales price or fixed costs, but would increase variable cost to $4.62 per unit for all units produced.
c-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
Differential revenues
Differential costs:
Variable cost increase on current production:
Variable cost on new production:
c-2. Should Playful Pens expand Machine 2's capability by adding these additional workers?
Yes
No
Business
1 answer:
Elan Coil [88]3 years ago
5 0

Answer:

a) B. Machine 2

b) $220,000

b-2) Yes , positive differential profit.

c-1) $162,000

c-2) Yes , positive differential profit.

Explanation:

B) Differential revenues  = $10.40 x 200,000 = $2,080,000

Differential costs:

Variable cost on new production = $5.20 x 200,000 = $1,040,000

Fixed costs = $820,000

differential profit = $2,080,000 - $1,040,000 - $820,000 = $220,000

c) Differential revenues  = $10.40 x 100,000 = $1,040,000

Differential costs:

Variable cost increase on current production = ($4.62 - $4.10) x 800,000 = $416,000

Variable cost on new production = $4.62 x 100,000 = $462,000

differential profit = $1,040,000 - $878,000 = $162,000

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Answer:

investment on bonds   200 millions

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to record the purchase of bonds

cash                             7 millions

      interest revenue             6 millions

      premium on bonds         1 million

interest proceeds of december 31th

Balance sheet:

bonds      200

premium    39

net            239

cash                                             250 millions

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              premium on bonds                               39 millions

              gain on sale of invesment                    11   millions

to record the sale of bonds

                       

Explanation:

<u>recording the bonds:</u>

acquisition             240

bonds face value (200)

premium                  40

It is a premium, as the bonds where purchased at higher price than face value

<u>Interest at December 31th</u>

To calculate the interest, we will calcualte the interest per payment:

7% annual coupon rate /2 payment per year = 3.5% semi-annual rate

5% market rate /2 payment per year = 2.5% semi-annual market rate

cash proceeds: 200 x 3.5% = 7

interest revenue:

carrying value x market rate

240 x 2.5% = 6

amortization 7 - 6 = 1

<u>Value in the balance sheet:</u>

the net value of the bond will be the face value plus the carrying value of the premium

<u>Sale of the bonds:</u>

selling price                           250

carrying value of the bonds (239)

gain on sale of bonds              1 1

It is a gain, as the bonds are being sold at a higher price than his carrying value.

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Answer:

Cost of goods sold= $816

Explanation:

Giving the following information:

Acme-Jones Corporation uses a weighted-average perpetual inventory system.

August 2: 24 units were purchased at $23 per unit.

August 18: 40 units were purchased at $25 per unit.

On August 29: 34 units were sold.

Weighted-average= (23 + 25)/2= $24

Cost of goods sold= 34*24= $816

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Answer:

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In the accounting process extracting a trial balance is the final step.

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On September 15, 2021, the Scottie Company board of directors declared a 8% stock dividend on common shares. The shares are to b
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Answer:

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Sept 15     Stock dividend                           $2,342,400

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Oct 1         No Journal entry

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What is the factor affect the net export of a country
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The factor that affect the net export of a country include:

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  • relative price levels
  • exchange rates
  • foreign trade policies etc

<h3>What is a net export?</h3>

This refers to the the difference between the monetary value of a nation's exports and imports over a certain time period.

In conclusion, the net export is derived after the deduction of the total import from the total export in a year.

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