Basil's Framing manufactures picture frames in one workshop, which has a practical capacity of 40,000 frames. The variable cost of a frame is $24 per unit, and the fixed costs of the workshop are $392,000 annually. Current annual demand is 28,000 frames. Basil's Framing bought the current workshop because of forecasts that demand for the frames would grow. Required: a. What cost per frame should the cost system report to facilitate management decision making?
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Basil's Framing manufactures picture frames in one workshop, which has a practical capacity of 40,000 frames. The variable cost of a frame is $24 per unit, and the fixed costs of the workshop are $392,000 annually. Current annual demand is 28,000 frames. Basil's Framing bought the current workshop because of
Required:
a. What cost per frame should the cost system report to facilitate management decision making?
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- Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?Eastman Publishing Company is considering publishing an electronic textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and Web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell access to the book for $46 each. a. What is the break even point? b. what profit or loss can be anticipated with a demand for 3800 copies c. Wiht a 3800 copy demand, proced at $50.95 , what profit or loss can be expected?
- The owner of Old-Fashioned Berry Pies, S. Simon, is contemplating adding a new line ofpies, which will require leasing new equipment for a monthly payment of $6,000. Variablecosts would be $2 per pie, and pies would retail for $7 each.a. How many pies must be sold in order to break even?b. What would the profit (loss) be if 1,000 pies are made and sold in a month?c. How many pies must be sold to realize a profit of $4,000?d. If 2,000 can be sold, and a profit target is $5,000, what price should be charged per pie?A. What are some sources of demand variation B. Describe three classical strategies for capacity and demand planning and managementJody of Jody’s Custom Tailoring is considering expandingher growing business. Th e question is whether to expand with abigger facility than she needs or with a small facility, knowing thatshe will have to reconsider expanding in three years.Jody has estimated the following chances for demand:• Th e likelihood of demand being high is 0.50.• Th e likelihood of demand being low is 0.50. She has also estimated profi ts for each alternative:• Large expansion has an estimated profi tability of either$200,000 or $100,000, depending on whether demand turnsout to be high or low.• Small expansion has a profi tability of $80,000, assuming thatdemand is low.• Small expansion with an occurrence of high demand wouldrequire considering whether to expand further. If thebusiness expands at that point, the profi tability is expectedto be $120,000. If it does not expand further, the profi tabilityis expected to be $70,000.Draw a decision tree and solve it. What should Jody’s CustomTailoring do?
- Charles Lackey operates a bakery in Idaho Falls,Idaho. Because of its excellent product and excellent loca-tion, demand has increased by 25% in the last year. On far toomany occasions, customers have not been able to purchasethe bread of their choice. Because of the size of the store, nonew ovens can be added. At a staff meeting, one employeesuggested ways to load the ovens differently so that moreloaves of bread can be baked at one time. This new processwill require that the ovens be loaded by hand, requiring addi-tional manpower. This is the only thing to be changed. If thebakery makes 1,500 loaves per month with a labor produc-tivity of 2.344 loaves per labor-hour, how many workers willLackey need to add? (Hint: Each worker works 160 hours permonth.)Q7. The president of Rose Bowl Enterprises, Desmond Howard, projects the firms aggregate DEMAND requirements over the next 8 months as follows: These are the monthly DEMAND, not production. MONTH JAN FEB MAR APR MAY JUN JULY AUG DEMAND 1,400 1,600 1,800 1,800 2,200 2,200 1,800 1,800 PRODUCTION 1,600 from December INVENTORY 200 from Dec plus 200 His operations manager is considering a new plan, which begins in January with 200 units on hand. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle time costs. The plan is called plan A. Plan A: Vary the workforce level to execute a strategy that produces the quantity demanded in the prior month. The December demand was given as 1,600 units per month. Therefore, the production for JAN will be 1,600. However, only 1,400 are needed. Therefore, the extra 200 produced go into inventory and there is a holding cost for inventory. Also, per the above, you already have 200 units in inventory…. If the opening backlog is 450 units, forecast demand is 700 units, and production is800 units, what will be the ending backlog?
- The current data for five trees that will be analyzed in the exercise are shown in the following table Expected Yearly Demand Quantity For Sale In-Field Quantity 440 74 Trees Christmas Palm Washingtonia Gumbo Limbo Yellow Poinciana Weeping Podo 81 165 159 49 185 Trees Christmas Palm Washingtonia Std Dev 31 155 35 32 68 Gumbo Limbo Yellow Poinciana The "expected yearly demand" is an estimate of the demand over the next year for the tree. The "std dev" is the standard deviation, a measure of the error, that corresponds to the forecast. For-sale and in-field quantities are given, and finally the total number of trees planted on the farm. The demand forecast and quantities are updated on an ongoing basis as trees are sold and planted on the farm. 374 70 42 290 Your first task is to evaluate the inventory "position" of each tree. The farm does not keep any backorder information, so the only data you have is "for-sale" and "in-field" quantities. Think about "for-sale" as on-hand trees, and…Charles Lackey operates a bakery in Idaho Fals, Idaho. Because of its excellent product and excelent location, demand has inoreased by 25% in the last year. On far boo many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a statf meeting, one employee suggested ways to load the ovens differently eo that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,500 loaves per month, Employees are paid S8 per hour. In addtion to the labor cost. Charles also has a constant utity cost per month of $850 and a per loaf ingredient cost of $0.50 Current multtactor productivity for 640 wark hourn per month - 0223 loavesidolar (round your response to three decimal places) Ater increasing the number of…Cairney, Incorporated manufactures a specialized part used in internal combustion engines. The annual demand for the part is 249,000 units. The facility has a practical capacity of 264,000 units annually. The company leased the current facility because facilities capable of manufacturing the unit require machines that can produce 66,000 units each. The annual cost of the facility is $1,013,760. The variable cost of a part is $4. Required: What cost per unit should the cost system report to facilitate management decision making? Note: Round your answer to 2 decimal places. What is the cost of excess capacity? cost per unit cost of excess capacity