Flash E - Card Manufacturing manufactures software parts for the computer software systems that produce e - cards. The Flash II
part is currently manufactured in the Computer Department. The Data Department also produces the part and the plant has excess capacity to produce the Flash II part. The current market price of the Flash II part is $ 900.. The managerial accountant reported the following manufacturing costs and variable expense data:
Flash E - Card Manufacturing
Manufacturing Costs and Variable Expense Report
Flash Component (Bold section should be attached to list of expense data below question and solutions.)_If the highest acceptable transfer price is $ 900in the market, what is the lowest acceptable in - house price the Data Department should receive to produce the part in - house at the ComputerDepartment?
A.$ 850
B.$ 200
C.$ 120
D.$ 1,170
Flash E - Card Manufacturing
Manufacturing Costs and Variable Expense Report
Flash Component (Bold section should be attached to list of expense data below question and solutions.)_If the highest acceptable transfer price is $ 900in the market, what is the lowest acceptable in - house price the Data Department should receive to produce the part in - house at the ComputerDepartment?
A.$ 850
B.$ 200
C.$ 120
D.$ 1,170
1 answer:
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Solution:
Given Information,
Heat input is ( ) = 5.5 ×
Btu/h
Combustion efficiency of the boiler () = 0.7
Combustion efficiency after turn up () = 0.8
Operation Hour (t) = 5200h
Unit cost (c) =
Calculate heat output from the boiler =
x
= 5.5 x x 0.7
= 3.85 x Btu/h
Calculate the heat input to the boiler after the tune-up
=
/
= 3.85 x / 0.8
= 4.8125 x Btu/h
Calculate the saved energy after the tune-up
=
-
= 5.5 x - 4.8125 x
Btu/h
= 0.6875 x Btu/h
Calculate the annual energy saving ( )
=
x t
= ( 0.6875 x Btu/h ) ( 5200 hr/yr)
= 3575 x Btu/h
Calculate the annual cost saving
Annual cost saving = x Unit cost
= 3575 x Btu/h x
= 82225