Reference no: EM132521710
Special-order decision
- ACME Plastics-a spinoff from the North American subsidiary of Societe Generale Plastac-specializes in the manufacture of one-litre plastic bottles. The plastic molding machines are capable of producing 100 bottles per hour. The firm estimates that the variable cost of producing a plastic bottle is 25 cents. The bottles are sold for 55 cents each.
- Management has been approached by a local toy company that would like the firm to produce a molded plastic toy for them. The toy company is willing to pay $3.30 per unit for the toy. The unit variable cost to manufacture the toy will be $2.64. In addition, ACME would have to incur a cost of $22,000 to construct the mold required exclusively for this order. Because the toy uses more plastic and is of a more intricate shape than a bottle, a molding machine can produce only 40 units per hour. The customer wants 100,000 units. Assume that ACME has a total capacity of 10,000 machine-hours available during the period in which the toy company wants delivery of the toys. The firm's fixed costs, excluding the costs to construct the toy mold, during the period will be $220,000.
Required
Question 1. Suppose the demand for its bottles is 750,000 units, and the special toy order has to be either taken in full or rejected totally. Should ACME accept the special toy order? Explain your answer.
Question 2. Suppose the demand for its bottles is 850,000 units,and the special toy order has to be either taken in full or rejected totally. Should ACME accept the special toy order? Explain your answer. What if the demand for its bottles is 900,000 units?
Question 3. Suppose the demand for its bottles is 850,000 units, and ACME can accept any quantity of the special toy order. How many bottles and toys should it manufacture? What if the demand for its bottles is 900,000 or 950,000 units?
Question 4. The management has located a firm that has just entered the molded plastic business. This firm has considerable excess capacity and more efficient molding machines, and is willing to subcontract the toy job, or any portion of it, for $3.08 per unit. It will construct its own toy mold. Suppose the demand for its bottles is 900,000 units, and ACME can accept any quantity of the special toy order. How many bottles and toys should ACME manufacture? How many toys should it subcontract out?
|
How much would sales have to increase to provide
: What would be the improvement in profit if, through better planning and control, the cost of manufacturing was reduced from 60% of sales to 50% of sales?
|
|
Approximate the vibrational partition function
: At what temperature will 4% of the molecules be in the 1st excited vibrational state? You may approximate the vibrational partition function
|
|
What should Concord record as an impairment loss on July
: Concord Corporation bought a machine on January 1, 2011 for $794000. What should Concord record as an impairment loss on July 1, 2021
|
|
Bob barnes is the managing partner of barnes
: Bob Barnes is the managing partner of Barnes, Barnes and Cobb, a law firm in your state. Bob spoke to Ashley at Big Insurance Company,
|
|
Should acme accept the special toy order
: How many bottles and toys should ACME manufacture? How many toys should it subcontract out? Should ACME accept the special toy order?
|
|
What is minimum depreciation deduction
: Duncan purchases and places in service office equipment with a cost of $40,000. What is his minimum 2018 depreciation deduction
|
|
Information system security professional
: You are an information system security professional for CCS International, a company that provides IT personnel for a variety of government and private contract
|
|
Calculate the estimated break-even point in units
: Sophiora Cosmetic Ltd, Calculate the estimated break-even point in units and in sales dollars of the Skin-care. and in sales dollars of the Make-up.
|
|
What was the dividend per share for the common shareholders
: On January 5th, Air Guitars Corp. declares a dividend of $235 000 to shareholders of record on January 18th, What was dividend per share for common shareholders
|