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
Harlamova29_29 [7]
2 years ago
6

The mythical Three Floyds Brewery in Munster, Indiana makes a beer called Zombie Dust, which it sells in large bottles to pubs a

nd stores in the Midwest. The setup cost of brewing and bottling a batch of beer is $1,800 per setup. The holding cost of storing a bottle of beer is $2.50 per year. The annual demand for Zombie Dust is 20,000 bottles. Three Floyds Brewery can brew and bottle beer at the rate of 400 bottles per day. The brewery operates 250 days per year and currently produces Zombie Dust in batches of 10,000 bottles.
a. What is the annual holding and setup cost of their current production schedule?
b. What is the economic production quantity (EPQ)?
c. What is the cost difference between the current production schedule and the EPQ?
Business
1 answer:
chubhunter [2.5K]2 years ago
4 0

Answer:

Setup cost (S) = 1800

Holding cost (H) = 2.5

Annual demand (D) = 20000

Daily demand (d) = Annual demand / Number of working days = 20000 bottles/250 = 80 bottles daily

Daily production (p) = 400

a. Given production quantity Q = 10000

Holding cost = 1/2*[(p-d)/p]*QH

Holding cost = ((400-80)/(2*400))*10000 *2.5= 10000

Ordering cost = (D/Q)S = (20000/10000)*1800 = 3600

Total Cost = Annual holding cost + Annual ordering Cost = 10000 + 3600 = 13600

b. Economic production Quantity (EPQ) = Q

Q = √2DS/H √p/p-d

Q = √2*20000*1800/2.5 √400 / 400-80

Q = 6000 bottles

Holding cost = 1/2*[(p-d)/p]*QH

Holding cost = ((400-80)/(2*400))*6000 *2.5= 6000

Ordering cost = (D/Q)S = (20000/6000)*1800 = 6000

Total Cost = Annual Holding cost + Annual ordering cost = 6000 + 6000 = 12000

C. Cost difference between the current production schedule and the EPQ = 13600 - 12000 = 1600

You might be interested in
Youngstown Rubber reports the following data for its first year of operation. Direct materials used $710,200 Direct Labor 350,00
ser-zykov [4K]

Answer:

$1,160,300

Explanation:

Total Manufacturing Costs are all costs related to the production of goods to be sold. This consists of direct costs such as labor and material and other indirect costs such as electricity and rentals.

<u>Calculation  of total manufacturing costs :</u>

Cost of goods manufactured         1,030,300

Add Closing Work In Process           130,000

Less Beginning Work In Process                 0

Total manufacturing costs            $1,160,300

6 0
3 years ago
Knight Company reports the following costs and expenses in May. Factory utilities $16,120 Direct labor $69,685 Depreciation on f
GarryVolchara [31]

Answer:

a. $180,850

b. $390,269

c. $74,837

Explanation:

a. The computation of the manufacturing overhead is shown below:

= Factory utilities  + Depreciation on factory equipment + Property taxes on factory building  + Indirect factory labor  + Indirect materials + Factory repairs+ Factory manager salary

=  $16,120  + $13,703 + $2,894 + $52,814 + $83,926 + $3,044  + $8,349

= $180,850

b. The computation of the product cost is shown below:

= Direct materials used + Direct labor +  manufacturing overhead

= $139,734 + $69,685 + $180,850

= $390,269

c. The computation of the period cost is shown below:

= Sales salaries + Depreciation on delivery trucks + Repairs to office equipment +  Advertising + Office supplies used

= $49,631 + $4,044 + $2,185 + $15,670 + $3,307

= $74,837

7 0
3 years ago
XYZ Company leased equipment to West Corporation under a lease agreement that qualifies as a finance lease to West but not as a
melomori [17]

Answer:

132,000$ will be recorded by west as amortization expense for the year.

Explanation:

Depreciation/amortization is systematic allocation of cost of asset over its useful life. In this case asset cost is not given so we assume that PV of lease payment is equal to market value (660,000 dollars) of asset.

In case of leased asset the useful life taken for calculation of depreciation is lower of 1) Useful life 2) Lease term as per applicable accounting standards.

So we have taken 5 years to charge depreciation on Straight line method.

Hence by dividing 660000 by five we get our answer.

7 0
2 years ago
Albee Township’s fiscal year ends on June 30. Albee uses encumbrance accounting. On April 5, year 1, an approved $1,000 purchase
Mice21 [21]

Answer:

Encumbrances $1000

Reserved for encumbraces $1000

Explanation:

Encumbrance is in the debit because is the money that we have destined for the purchase and  since we have to get the money from our funds Reserved for encumbrances is in the credit.

5 0
3 years ago
Explain the significance of capital structure.
mojhsa [17]
Capital structure increases the ability of the company to find new wealth- creating investment opportunities.
4 0
3 years ago
Read 2 more answers
Other questions:
  • For jacobs company, the predetermined overhead rate is 70% of direct labor cost. during the month, $600,000 of factory labor cos
    10·1 answer
  • Within the domain of logistics management, the customer service concept implies that firms should:
    15·1 answer
  • Jim Jones, the landlord, rents a property to Tom Smith, a physically disabled person. Mr. Smith, with Mr. Jones' permission, mod
    11·1 answer
  • One of the primary reasons for the slow response to help the victims of Hurricane Katrina was the failure of assistance to arriv
    7·1 answer
  • Which promotion exemplifies the use of a fixed-ratio schedule of reinforcement?a café prints "you are a winner" on a random one-
    8·1 answer
  • Match the tasks with the professionals who would complete them.
    8·2 answers
  • The approach to ethical behavior which proposes that actions and plans should be judged by their consequences, thus producing th
    9·1 answer
  • Is it good or bad to have lots of layers in a business<br> and why? What can be done?
    14·1 answer
  • A useful way of standardizing financial statements is to choose a ____ and then express each item relative to the _____.
    9·1 answer
  • A company received a bill for newspaper advertising services, $340. the bill will be paid in 10 days. how would the transaction
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!