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lesya692 [45]
2 years ago
10

Crane, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments a

nd 200 pressure gauges were produced, and overhead costs of $72,750 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost 1. Materials handling Number of requisitions $30,000 2. Machine setups Number of setups 23,750 3. Quality inspections Number of inspections 19,000 $72,750 The cost driver volume for each product was as follows. Cost Drivers Instruments Gauges Total Number of requisitions 375 625 1,000 Number of setups 175 300 475 Number of inspections 225 250 475
Business
1 answer:
grigory [225]2 years ago
4 0

Answer:

Requirement: <em>Determine the overhead rate for each activity "Materials handling, Machine setups, Quality inspections"</em>

<em />

Materials handling overhead rate = Total cost / Cost driver volume

Materials handling overhead rate = $30,000 / 1,000

Materials handling overhead rate = $30

Machine setups overhead rate = Total cost / Cost driver volume

Machine setups overhead rate = $23,750 / 475

Machine setups overhead rate = $50

Quality inspections overhead rate = Total cost / Cost driver volume

Quality inspections overhead rate = $19,000 / 475

Quality inspections overhead rate = $40

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An electronics firm is currently manufacturing an item that has a variable cost of $0.50 per unit and a selling price of $1.00 p
Ne4ueva [31]

Answer:

Part (a) Should the firm buy the new equipment

The Firm Should not Buy the New Equipment since there is  No Profit ( instead $1000 Profit lost) from this decision and is in a worse off position than before.

Part (b) should the company buy the new equipment and increase the selling price?

The Firm Should Buy the New Equipment since an incremental Profit of $ 1500 is expected from this decision.

Explanation:

Part (a) Should the firm buy the new equipment

                                                 Do Not Buy      Buy New Equipment

                                                        $                                $

Sales                                             30,000                     50,000

Less Variable Cost                       15,000                      30,000

Contribution                                  15,000                      20,000

Less Fixed Costs                          14,000                      20,000

Net Income                                     1,000                           0

The Firm Should not Buy the New Equipment since there is  No Profit ( instead $1000 Profit lost) from this decision and is in a worse off position than before.

Part (b) should the company buy the new equipment and increase the selling price?

                                                 Do Not Buy      Buy New Equipment

                                                        $                                $

Sales                                             30,000                     49,500

Less Variable Cost                       15,000                      27,000

Contribution                                  15,000                     22,500

Less Fixed Costs                          14,000                      20,000

Net Income                                     1,000                        2,500

The Firm Should Buy the New Equipment since an incremental Profit of $ 1500 is expected from this decision.

5 0
3 years ago
What are the four key factors in a firm’s credit policy? How would a relaxed policy differ from a restrictive policy? Give examp
Free_Kalibri [48]

Answer:

Here are six factors that you ought to consider when building up a credit approach and that should impact your choice whether to stretch out credit to clients. You should allow credit just if the positives of doing so exceed the negatives. Regularly, this is hard to decide.  

The Effect on Sales Revenue  

The explanation you would allow credit in any case is so your clients can defer paying you. This is helpful for your clients and will most likely win clients for you, yet it isn't so advantageous for you and your primary concern, in any event on a quick premise. Deals income from the deal you made to your client will be deferred for either the markdown period or the credit time frame, or maybe more if the client is late in making the payment. The upside is that you might have the option to raise your costs on the off chance that you offer credit.  

You have an exchange off. The chance of more clients and higher deals costs in the event that you offer credit in return for conceivable postponed and late payments. Shockingly, it's difficult to evaluate this.  

The Effect on Cost of Goods Sold  

Regardless of whether you sell items or administrations you must have them accessible and, on account of items, in stock, when a deal is made. At the point when you expand credit, that implies paying for that item or administration so as to have it in stock however not getting paid for it promptly when it is bought. Despite the fact that you will in the long run get paid, your business must have enough income to make up for the deferred payment Furthermore, you lose any premium pay you may have earned on that cash.  

Once more, you have an exchange off. This time it is more clients and higher deal costs in return for lost premium salary and briefly lower income.  

The Probability of Bad Debts  

In the event that an organization makes every one of its deals for money, there is no chance of awful obligations or obligations it can't gather. In the event that any level of the organization's deals are using a credit card, there exists the chance of awful obligations or obligations you, as an entrepreneur, will never gather. At the point when you are building up your credit strategy, you ought to take into consideration some level of your credit accounts that will never be paid.  

The exchange off here is that some level of your credit deals will never be paid. You need to choose if this factor is worth more clients and higher deals costs.  

Offering a Cash Discount  

Especially when you offer credit on a business-to-business (B2B) premise, most organizations offer different organizations a money rebate. At the end of the day, if the business takes care of the tab inside the markdown period, that business gets a rebate. In the event that they don't pay inside the markdown period, at that point they should pay inside the credit time frame or the first time frame inside which the bill is expected.  

Money limits are regularly expressed like this model: 2/10, net 30. On the off chance that those are your credit terms, it implies that you offer a 2% markdown if the bill is paid in 10 days. On the off chance that you don't take the markdown, the bill is expected inside the multi day credit period.  

Is getting your cash in 10 days worth the 2% markdown that you offer? That is the exchange off you have with respect to money limits and whether you should offer them.  

Assuming Debt  

On the off chance that you, as an entrepreneur, choose to offer credit to your clients, odds are you should assume obligation to back your records receivables. As a private company, you will most likely be unable to stand to sell your items or administrations without quick payment except if you have a decent working capital base. In the event that you need to assume obligation, you need to factor in the expense of transient acquiring as a feature of your choice to offer credit.  

Offering credit to your clients is a major choice with wide-arriving at impacts for your organization. You need to consider the variables above and then some. Will offering credit bring about recurrent business? Do you have the opportunity and assets to gather late payments? Settle on this choice astutely.

4 0
3 years ago
Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has investe
gtnhenbr [62]

Answer:

Crawford Construction

1. Crawford Construction sold and replaced its inventory:

a. 4.14 x

2. With Construction Industry Inventory Turnover Ratio as 4.55x, Crawford Construction:

b. Crawford Construction is holding more inventory per dollar of sales compared to the industry average

Explanation:

a) Data and Calculations:

Quick ratio = 2.00x,

Cash = $36,225

Accounts receivable = $20,125

Inventory = x

x= $80,500 - 36,225 - 20,125 = $24,150

Total current assets = $80,500

Total current liabilities = $28,175

Annual sales = $100,000

Using annual sales instead of cost of goods sold to calculate the inventory turnover, = Turnover/Inventory = $100,000/$24,150 = 4.14x

b) Quick ratio equals (Current assets - Inventory)/Current Liabilities.  Computing the quick ratio in place of the current ratio can be used to identify how Crawford Construction can meet its current (short-term) debts without selling inventory and recovering funds from the sale.

c) The Inventory Turnover Ratio divides the cost of goods sold by the average inventory.  The Sales value can approximate the cost of goods sold.  The ratio shows the efficiency of Crawford Construction in handling its inventory.  The higher the value of the ratio, the better, showing that Crawford is more efficient when it gets a higher turnover ratio.

7 0
2 years ago
_____ is defined as a strategy in which a firm engages in several different businesses that may or may not be related in order t
Vlad1618 [11]

Answer:

Diversification

Explanation:

The key words here are 'several businesses'. A company engage in many businesses in order to mitigate or reduce its business risk, and also to create and add more value to customers. This offers a far advantage position than a stand alone entities who deal with only one product or service.

6 0
3 years ago
Company A purchases Company B. This is a 100% equity purchase which means that Company A acquires all of the Company B assets an
Drupady [299]

Answer:

Company A and Company B

Calculation of Goodwill on Acquisition:

= $212,433

Explanation:

a) Current market value of:

 Tangible physical assets = $1,234,567

  Intangible asset =                 $125,000

Total assets' value =            $1,359,567

less Liabilities:

  Operating =  $160,000

  Financial =     600,000      ($760,000)

Net value of assets =             $599,567

Purchase Price (Company B) $812,000

Goodwill                                  $212,433

b) Company A acquired Goodwill when it bought over Company B.  This is an intangible asset which is calculated by subtracting the net value of assets (the difference between the fair market value of the assets and liabilities) from the purchase price of the acquired subsidiary.

3 0
3 years ago
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