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Question;21. TwoShaft;Inc. manufactures a wide variety of parts for recreational boating, including;boat engines. The component is purchased by OEM (Original Equipment;Manufacturers) such as Mercury and Honda, for use in the larger and more;powerful outboards. The units sell for $660, and sales volume averages 32,000;units per year. Recently, TwoShaft's major competitor lowered the price of the;equivalent part to $590. The market was very competitive, and TwoShaft realized;it had to meet the new price or lose significant market share. The controller;assembled the following data for the most recent year;The target cost;for maintaining current market share and profitability is (round to nearest;cent);A.;$466.61.;B.;$417.12.;C.;$396.61.;D.;$390.61.;E.;$460.61.;22. Lens;Care Inc. (LCI) manufactures specialized equipment for polishing optical;lenses. There are two models - one mainly used for fine eyewear (F-32) and;another for lenses used in binoculars, cameras, and similar equipment (B-13).;The manufacturing cost;of each unit is calculated using activity-based costing, using the following;manufacturing cost pools;LCI;currently sells the B-13 model for $1,775 and the F-32 model for $1,220.;Manufacturing costs and activity usage for the two products are as follows;The product cost;for model B-13 is;A.;$1,457.82.;B.;$1,293.32.;C.;$1,159.34.;D.;$905.31.;E.;$980.91.;23.;Lens;Care Inc. (LCI) manufactures specialized equipment for polishing optical;lenses. There are two models - one mainly used for fine eyewear (F-32) and;another for lenses used in binoculars, cameras, and similar equipment (B-13).;The;manufacturing cost of each unit is calculated using activity-based costing;using the following manufacturing cost pools;LCI currently sells the B-13 model for;$1,775 and the F-32 model for $1,220. Manufacturing costs and activity usage;for the two products are as follows;The product cost;for model F-32 is;A.;$1,457.82.;B.;$1,293.32.;C.;$1,159.34.;D.;$905.31.;E.;$980.91.;24. Lens;Care Inc. (LCI) manufactures specialized equipment for polishing optical;lenses. There are two models - one mainly used for fine eyewear (F-32) and;another for lenses used in binoculars, cameras, and similar equipment (B-13).;The manufacturing cost of;each unit is calculated using activity-based costing, using the following;manufacturing cost pools;LCI;currently sells the B-13 model for $1,775 and the F-32 model for $1,220.;Manufacturing costs and activity usage for the two products are as follows;The profit;margin based on manufacturing cost for model B-13 is;A.;$481.68.;B.;$314.69.;C.;$239.09.;D.;$317.18.;E.;$338.16.;25. Lens;Care Inc. (LCI) manufactures specialized equipment for polishing optical;lenses. There are two models - one mainly used for fine eyewear (F-32) and;another for lenses used in binoculars, cameras, and similar equipment (B-13).;The manufacturing cost of;each unit is calculated using activity-based costing, using the following;manufacturing cost pools;LCI;currently sells the B-13 model for $1,775 and the F-32 model for $1,220.;Manufacturing costs and activity usage for the two products are as follows;The profit;margin based on manufacturing cost for model F-32 is;A.;$481.68.;B.;$314.69.;C.;$239.09.;D.;$317.18.;E.;$338.16.;26. Lens;Care Inc. (LCI) manufactures specialized equipment for polishing optical;lenses. There are two models - one mainly used for fine eyewear (F-32) and;another for lenses used in binoculars, cameras, and similar equipment (B-13).;The manufacturing cost of;each unit is calculated using activity-based costing, using the following;manufacturing cost pools;LCI;currently sells the B-13 model for $1,775 and the F-32 model for $1,220.;Manufacturing costs and activity usage for the two products are as follows;If;the market price for B-13 and F-32 are reduced to $1,695 and $1,095;respectively, and Lens Care wants to maintain market share and profitability;what is the target cost for B-13 and F-32 (round to nearest whole dollar)?;A.;A;B.;B;C.;C;D.;D;E.;E;27. To;achieve the target cost, Lens Care plans to reduce materials handling costs.;How many parts must be removed from B-13 in order to achieve the target cost;for B-13(round up to whole units)?;A.;11;B.;46;C.;34;D.;28;E.;53;28. To;achieve the target cost, Lens Care plans to reduce materials handling costs.;How many parts must be removed from B-13 in order to achieve the target cost;for B-13 (round up to whole units)?;A.;11;B.;46;C.;34;D.;28;E.;53;29. Quality;Industries manufactures large workbenches for industrial use. Yewell Hartnet;the Vice President for marketing at Quality Industries, concluded from market;analysis that sales were dwindling for Standards' workbenches due to aggressive;pricing by competitors. Quality's workbench sells for $1,140 whereas the;competition's comparable workbench sells for $1,060. Yewell determined that a;price drop to $1,060 would be necessary to retain market share and annual sales;of 13,000 tables.;Cost data based on sales;of 13,000 tables;The current cost;per unit is;A.;$588.;B.;$523.;C.;$465.;D.;$637.;E.;$445.;30.;The current profit per unit is;A.;$503.;B.;$674.;C.;$616.;D.;$524.;E.;$694.;31. Quality;Industries manufactures large workbenches for industrial use. Yewell Hartnet;the Vice President for marketing at Quality Industries, concluded from market;analysis that sales were dwindling for Standards' workbenches due to aggressive;pricing by competitors. Quality's workbench sells for $1,140 whereas the;competition's comparable workbench sells for $1,060. Yewell determined that a;price drop to $1,060 would be necessary to retain market share and annual sales;of 13,000 tables.;Cost data based on sales;of 13,000 tables;If the profit;per unit is maintained, the target cost per unit is;A.;$488.81.;B.;$556.54.;C.;$515.81.;D.;$423.73.;E.;E)$345.42.;32.;In order to reduce costs so as to reach the desired target cost, Quality;Industries should also focus on reducing the cost of;A.;Direct materials;B.;Direct labor;C.;Machine setups;D.;Mechanical assembly;33.;Suzy Co. produces and sells three products (X, Y, and Z). The following data;relate to the three products;Which is the;most profitable product if there is no constraint on labor time?;A.;Product X.;B.;Product Y.;C.;Product Z.;D.;More than one of the;products has equal total contributions per labor minute.;E.;There isn't enough;information to answer the question.;34.;Suzy Co. produces and sells three products (X, Y, and Z). The following data;relate to the three products;Which is the;most profitable product if there is a constraint on labor time, so that total;demand for all products cannot be met?;A.;Product X.;B.;Product Y.;C.;Product Z.;D.;More than one of the;products has equal total contributions per labor minute.;E.;There isn't enough;information to answer the question.;35. Ken;Yalters, the COO of FreshSkin, asked his cost management team for a product;line profitability analysis for his firm's two products - Askin and Bskin. The;two products are skin care products that require a large amount of research and;development and advertising. He received the report below. Ken concluded that;Askin was the more profitable product, and that perhaps cost-cutting measures;should be applied to the Bskin product.;Seventy-five;percent of the research and development and selling expenses were traceable to;Askin.;Profit;before taxes for the Askin product, per life-cycle income statements, is;A.;$175,000.;B.;$425,000.;C.;$522,500.;D.;$207,500.;E.;E)$332,500.

 

Paper#45012 | Written in 18-Jul-2015

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