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
STatiana [176]
2 years ago
5

Quality improvement, relevant costs, relevant revenues. SpeedPrint manufactures and sells 18,000 high-technology printing presse

s each year. The variable and fixed costs of rework and repair are as follows:
Variable Cost Fixed Cost Total Cost
Rework Cost per hr. $79 $115 $194
Repair Cost
Customer Support cost/hr. 35 55 90
Transportation Cost/load 350 115 465
Warranty repair cost/hour 89 150 239
Speed Print’s current presses have a quality problem that causes variations in the shade of some colors. Its engineers suggest changing a key component in each press. The new component will cost $70 more than the old one. In the next year, however, Speed Print expects that with the new component it will
(1) save 14,000 hours of rework,
(2) save 850 hours of customer support,
(3) move 225 fewer loads,
(4) save 8,000 hours of warranty repairs, and
(5) sell an additional 140 printing presses, for a total contribution margin of $1,680,000. SpeedPrint believes that even as it improves quality, it will not be able to save any of the fixed costs of rework or repair. SpeedPrint uses a 1-year time horizon for this decision because it plans to introduce a new press at the end of the year.
1. Should SpeedPrint change to the new component? Show your calculations.
2. Suppose the estimate of 140 additional printing presses sold is uncertain. What is the minimum number of additional printing presses that SpeedPrint needs to sell to justify adopting the new component?
3. What other factors should managers at SpeedPrint consider when making their decision about changing to a new component?
Business
1 answer:
Anna007 [38]2 years ago
8 0

Answer:

1. Speed print SHOULD CHANGE to the new component

2. Since the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.

3. Nonfinancial factors

Explanation:

1. Calculation to show whether Speed print

should change to the new component

First step is to calculate the Relevant costs

Relevant costs = $70 *18,000 copiers

Relevant costs= $1,260,000

Second step is to calculate Relevant Benefits

RELEVANT BENEFITS

Savings in rework costs $1,106,000

($79 *14,000 hours)

Add Savings in customer-support costs $29,750

($35 *850 hours)

Add Savings in transportation costs for parts $78,750

($350 *225 fewer loads)

Add Savings in warranty repair costs $712,000

($89 *8,000 repair-hours)

Add Contribution margin from increased sales $1,680,000

Cost savings and additional contribution margin $3,606,500

($1,106,000+$29,750+$78,750+$712,000+$1,680,000)

Based on the above calculation relevant benefits of the amount of $3,606,500 is higher than the relevant costs of the amount of $1,260,000 which means that Speed print

SHOULD CHANGE to the new component.

2. Based on the above calculation it shows that the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.

Calculation for INCREMENTAL SAVINGS

Savings in rework costs $1,106,000

($79 *14,000 rework hours)

Add Savings in customer-support costs $29,750

($35 *850 customer-support hours)

Add Savings in transportation costs for parts $78,750

($350 *225 fewer loads)

Add Savings in warranty repair costs $712,000

($89 *8,000 repair-hours)

Incremental savings $1,926,500

($1,106,000 + $29,750 + $78,750 + $712,000)

3. The factors that the managers at SpeedPrint should consider when making their decision about changing to a new component will be NON-FINANCIAL FACTORS.

You might be interested in
Xavier and Yolonda have original investments of $100,000 and $50,000 respectively in a partnership. The articles of partnership
sveticcg [70]

Answer:

Total of Xavier's share = $49750

Explanation:

The allocation of net income to both Xavier and Yolonda will be as follows,

Net Income                              90000

<u>Interest on Capital:</u>

Xavier(0.15 * 100000)      15000  

Yolonda(0.15 * 50000)    <u>  7500</u>   <u> (22500) </u>

                                              67500

<u>Salary:</u>  

Xavier                           22000  

Yolonda                           <u>20000</u>      (<u>42000)</u>

                                               25500

<u>Share of remaining profit:</u>  

Xavier                             12750  

Yolonda                             <u>12750</u>        <u>25500 </u>

<u />

Total of Xavier's share = 15000 + 22000 + 12750  = $49750

4 0
3 years ago
Which change should be made to the above cover letter excerpt before sending it to an employer
choli [55]
Hey I don't see a picture or anything can you please post the picture
3 0
3 years ago
Read 2 more answers
2. If the interest rate on a savings account is 0.018%, approximately how much money do you need to keep in this account for 1 y
MA_775_DIABLO [31]

The interest from an investment is calculated through the equation,

    I = P x i

Where I is the interest, P is the principal amount and i is the interest rate.

   P = I / i

Substituting the known values,

   P = ($9.99) / (0.018/100) = $55,500

The answer to this item is therefore approximately $55,500. 

7 0
3 years ago
Which kind of business organization does not allow for profit sharing?
Nataly_w [17]
The answer is d sole proprietorship
6 0
3 years ago
The price of cranberry juice suddenly increases. As a result, Glenda begins drinking more grape juice, which is less expensive,
Angelina_Jolie [31]
Im guessing a) availbility of substitutes the reason is because when i read this it makes me think the price went up because maybe cranberries are not in season but grapes are. Usually when something is not in season it cost more than when it was.
7 0
3 years ago
Other questions:
  • Durable goods and non-durable goods comprise approximately ________ of the supply side of the gdp.
    5·1 answer
  • $1,000 of supplies were purchased at the beginning of the month. $300 were used during the month. (The Supplies account was incr
    5·1 answer
  • The partial worksheet for the Jamison Company showed the following data on October 31, 2019. Income Balance Statement SheetAccou
    10·1 answer
  • At Spyglass Inc., a private eye firm, new hires are chosen with utmost care. The reputation of the company is to provide clients
    13·1 answer
  • Rhett made his annual gambling trip to Uwin Casino. On this trip Rhett won $250 at the slots and $1.200 at poker. Also this year
    5·1 answer
  • What term is used to describe an account that a bond trustee manages for the sole purpose of redeeming bonds early?
    5·2 answers
  • Explanation of own capital
    15·1 answer
  • Which of the following statements is incorrect regarding the process of building a company's brand, particularly for young firms
    14·1 answer
  • DYI Construction Co. is considering a new inventory system that will cost $750,000. The system is expected to generate positive
    8·1 answer
  • Create a simple sketch showing what Hawkins and Crusoe could produce if the two men lived independently on different sides of th
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!