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3 years ago

Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:

Business

1 answer:

balandron [24]3 years ago

5 0

Answer:

Harbour Company

1. Overhead rate, using traditional costing system with machine hours as the cost driver:

Predetermined rate = $175,200/3,000 = $58.40

Overhead Cost assigned to each product:

Home Work

Expected production 1,700 1,300

Cost assigned = $99,280 $75,920

2. Production cost per unit:

Home Work

Expected production 700 units 400 units

Direct materials cost $21,000 (30 * 700) $19,200 (48 * 400)

Direct labor cost 14,000 (20 * 700) 12,000 (30 * 400)

Overhead cost 99,280 75,920

Total costs $134,280 $107,120

Cost per unit $191.83 $267.80

3. Gross margin per unit:

Home Work

Sales price per unit $300.00 $500.00

Cost price per unit 191.83 267.80

Gross margin per unit $108.17 $232.20

4. Activity Rates, using ABC system:

Cost Pools: Cost Drivers Usage Rates

Setup costs $ 68,800 Number of setups 100 $688

Quality control 58,400 Number of inspections 730 $80

Maintenance 48,000 Number of machine hours 3,000 $16

5. Assignment of overhead costs to each product, using ABC:

Rate Home Work

Setup costs $ 68,800 $688 $28,896 (42* $688) $39,904 (58*$688)

Quality control 58,400 $80 27,200 (340*$80) 31,200 (390*$80)

Maintenance 48,000 $16 27,200 (1,700*$16) 20,800 (1,300*$16)

Total overhead $175,200 $104,096 $91,904

6. Production costs:

Home Work

Expected production 700 units 400 units

Direct materials cost $21,000 (30 * 700) $19,200 (48 * 400)

Direct labor cost 14,000 (20 * 700) 12,000 (30 * 400)

Overhead cost 104,096 91,904

Total costs $139,096 $123,104

Cost per unit $198.71 $307.76

7. Gross margin per unit:

Home Work

Sales price per unit $300.00 $500.00

Cost price per unit 198.71 307.76

Gross margin per unit $101.29 $192.24

8. Gross margins per unit compared:

Home Work

Traditional costing system $108.17 $232.20

ABC costing system $101.29 $192.24

ABC system looks more equitable than the traditional costing system as the gross margin per unit is reduced for each product line.

Explanation:

a) Data and Calculations:

Home Work

Direct materials cost per unit 30 48

Direct labor cost per unit 20 30

Sales price per unit 300 500

Expected production per month 700 units 400 units

Monthly overhead costs = $175,200

Cost Pools: Cost Drivers

Home Work Total

Setup costs $ 68,800 Number of setups 42 58 100

Quality control 58,400 Number of inspections 340 390 730

Maintenance 48,000 Number of machine hours 1,700 1,300 3,000

Total $ 175,200

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PE and Terminal Stock Price [LO2] In practice, a common way to value a share of stock when a company pays dividends is to value

solong [7]

Answer:

$150.15

$92.31

Explanation:

Target stock price in year 5 = Earnings per share in year 5 x benchmark PE ratio

Earnings per share in year 5 = dividends per share in year 5/ pay-out ratio

Dividend in year 1 = $1.15 x 1.20 = $1.38

Dividend in year 2 = $ 1.15 x 1.20^2 = $1.66

Dividend in year 3 = $1.15 x 1.20^3 = $1.99

Dividend in year 4 = $1.15 x 1.20^4 = $2.38

Dividend in year 5 = $1.15 x 1.20^5 = $2.86

$2.86 / 0.4 = $7.15

$7.15 x 21 = $150.15

b. the stock price today can be found by finding the present value of the dividends

Present value can be found using a financial calculator

Earnings per share in year 5 = dividends per share in year 5/ pay-out ratio

Dividend in year 1 = $1.15 x 1.20 = $1.38

Dividend in year 2 = $ 1.15 x 1.20^2 = $1.66

Dividend in year 3 = $1.15 x 1.20^3 = $1.99

Dividend in year 4 = $1.15 x 1.20^4 = $2.38

Dividend in year 5 = $1.15 x 1.20^5 = $2.86

Stock price in year 5 = $150.15

i = 12%

Stock price (present value) = $92.31

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

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Answer:

Chapter 7 bankruptcy

Explanation:

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Free trade proponents and protectionists have drastically different views regarding trade. Which side of the debate do you side

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Answer:

Protectionist.

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By imposing high tariffs, foreign companies producing those goods would pass the burden to final consumers in form of high prices hence discourage consumers from buying them. Few of those goods will then enter the country due to the heavy duty and low patronage.

Imposition of heavy tariffs will also generate more revenue for the government which will be used to financed basic infrastructures like housing, sewage system, electricity, etc.

Although proponents of free trade are of the opinion that there should be no restriction to trading among countries. They also suggested the removal of high tariffs from goods exported from other country.

The above seems good, yet the consequences outweigh the gain therein. For instance, removal of duty or tariff would result in revenue loss for the government hence unable to finance basic infrastructures. The country will also become dumping ground for imported goods because they will sold at lower price due to it's poor quality.

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