Possibility of making and selling paging equipment

Assignment Help Financial Accounting

Reference no: EM131262299

Magneficent modems has excess productuction capacity and is considering the possibility of making and selling paging equipment. The following esimates are based on a production and sales volume of 1000 pagers. Unit levels manufacturing costs are expected to be $20. sales commissions will be established at $1 per unit. the current facility level costs including depreciation on manufacturing equipment (60000) rent on the manufacturing facilities (50000) depreciation on the administrative equipment (12000) and other fixed administrative expenses (71950) will not be affected by the production of the pagers. the chief accountant has decided to allocate the facility level costs to excisting products (modems) and to the new product ( pagers) on the basis of the number of unit product made ( i.e 5000 modems and 1000 pagers) a. determine the per unit cost of making the selling 1000 pagers b. assuming the pagers could be sold at a price of $34 each should magnificent make the pagers ? c. comment on the validity of the number of units as an allocation base.

Reference no: EM131262299

Questions Cloud

Materials cost and conversion cost per equivalent unit : During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Using the weighted-average method, compute the direct materials cost and the conversion cost pe..

Prepare journal entries to record these three transactions : During the current month, a company that uses job order costing purchases $54,000 in raw materials for cash. It then uses $16,000 of raw materials indirectly as factory supplies and uses $28,100 of raw materials as direct materials. Prepare journal e..

Calculate amount of revenue-gross profit to be recognized : In 2016, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2018. Calculate the amount of revenue and gross profit to be recognized in each of the three year..

What journal entries should clemens record for completion : Clemens Cars' job cost sheet for job A40 shows that the cost to add security features to a car was $19,500. The car was delivered to the customer, who paid $24,200 in cash for the added features. What journal entries should Clemens record for the com..

Possibility of making and selling paging equipment : Magneficent modems has excess productuction capacity and is considering the possibility of making and selling paging equipment. The following esimates are based on a production and sales volume of 1000 pagers. Unit levels manufacturing costs are expe..

Assume at-risk limitation equals the tax basis limitation : Jessica is a one-third owner in Bikes-R-Us, an S corporation that experienced a $45,000 loss this year (year 1). If her stock basis is $10,000 at the beginning of the year, how much of this loss clears the hurdle for deductibility (assume at-risk lim..

What price should it charge for kits produced : latemir company expects to make 7200 travel sewing kits in 2015. In january the company made 1800 kits. material and labor cost for january eas 7200 and 9000 respectively. assuming latimer desires to sell its sewing kits for 20% of cost what price sh..

Cell phone company offers two different plans : A cell phone company offers two different plans. Plan A costs $95 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. What is your sister’s total cost under each of the two plans? Suppose your sister..

Uses the straight-line method of amortization : On November 1, 2014, Horton Company purchased Lopez, Inc., 10-year, 9%, bonds with a face value of $600,000, for $540,000. An additional $15,000 was paid for the accrued interest. Interest is payable semiannually on January 1 and July 1. The bonds ma..

User Account

All Pages