Reference no: EM133005776

Problem 1 - You are working for a large firm that has asked you to attend á career fair at a university that is 185 miles from your office. You need to be there at 9:00 a.m. on a Monday morning. You can drive your personal car and be reimbursed $0.55 per mile, but you would need to leave home at 5:30 a.m. to get to the event and set up on time. Company policy allows you to spend the night if you must leave town before 6:00 a.m. The hotel across the street from campus charges $85 per night. Instead of driving, you could catch a 7:00 a.m. flight with a round-trip fare of $260. Flying would require you to rent a car for $29 per day, and you would have an airport parking fee of $20 for the day. The company pays a per diem of $40 for incidentals if you spend at least 6 hours out of town. (The per diem would be for one 24-hour period for either flying or driving.) As a manager, you are responsible for recruiting within a budget and want to determine which is more economical. Use the information provided to answer these questions.

a. What is the total amount of expenses you would include on your expense report if you drive?

b. What is the total amount of expenses you would include on your expense report if you fly?

c. What is the relevant cost of driving?

d. What is the relevant cost of flying?

e. What is the differential cost of flying over driving?

Problem 2 - Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on thee sharpening machine to service minimum demand for each product of 4,000 units, how much will profit increase if 200 more hours of machine time can be obtained?

Problem 3 - The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $24 dollars and has a unit variable cost of $18. The company has budgeted the following data for November:

Sales of $1,152,200, all in cash.

A cash balance on November 1 of $48,000.

Cash disbursements (other than interest) during November of $1,160,000.

A minimum cash balance on November 30 of $60,000.

If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during November. The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is?