Question

a) Power Comp has decided to discontinue its Model 250 computer. • It currently has 5,000...

a) Power Comp has decided to discontinue its Model 250 computer.

• It currently has 5,000 partially completed units on hand.

• To date, the company has spent $ 900 per unit, or $ 4,500,000 to bring these computers to their current stage of completion.

The company estimates that an additional $ 600 per unit will be incurred to complete production. The prices have fallen since the company has announced the product will be discontinued. If the units are completed, they can be sold for only $ 1 200.


Should the company complete production or sell them to an assembly company as they are for $ 700 per unit?


b) The company have to pay commissions of $11,000 when 80,000 units are sold and $14,000 when 115,000 units are sold, what is the variable and fixed portion of commission?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Solution-a
Company Should sell them to an assembly company as they are for $700 per unit because, if unit will be completed and sold the net benefit will be ( $1200-$600) i.e. $600 and unit can be sold as they are to assembly company at $700. there will be incremental income of $100 per Unit, in case sold to assembly company
Solution-b
Variabel commission per unit= (Cost at higher unit - Cost at lower unit )/ ( Higher Unit- Lower Unit)
=(14000-11000)/(115000-80000)= $0.0857 per Unit
Fixed Portion = Total Cost for 80000 Unit- Variable cost for 80000 Unit
=11000-(80000*0.0857)=$4144
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Oak, Inc. has decided to discontinue manufacturing its Quantum model personal organizer. Currently the company has...
Oak, Inc. has decided to discontinue manufacturing its Quantum model personal organizer. Currently the company has a number of partially completed personal organizers on hand. The company has spent $114 per unit to manufacture these organizers. To complete each unit, costs of $13 for material and $17 for direct labor will be incurred. In addition, $9 of variable overhead and $35 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be added per unit. If Oak,...
Beca, Inc. has decided to discontinue manufacturing its Quantum model credit card reader. Currently the company...
Beca, Inc. has decided to discontinue manufacturing its Quantum model credit card reader. Currently the company has a number of partially completed readers on hand. The company has spent $111 per unit to manufacture these credit card readers. To complete each unit, costs of $15 for material and $17 for direct labor will be incurred. In addition, $11 of variable overhead and $34 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be added per unit....
Munoz Company manufactures a personal computer designed for use in schools and markets it under its...
Munoz Company manufactures a personal computer designed for use in schools and markets it under its own label. Munoz has the capacity to produce 29,000 units a year but is currently producing and selling only 11,000 units a year. The computer’s normal selling price is $1,770 per unit with no volume discounts. The unit-level costs of the computer’s production are $500 for direct materials, $170 for direct labor, and $100 for indirect unit-level manufacturing costs. The total product- and facility-level...
company has variable costs of $34.50, total fixed costs of $21,700,000 and plans to sell its...
company has variable costs of $34.50, total fixed costs of $21,700,000 and plans to sell its product for $45.00. In 2018 it sold 2,400,000 units of product. Required: e) what is the operating leverage in 2018; f) the production manager wants to automate production and lower variable costs by $3 per unit and spend an additional $4,500,000 fixed costs per year- is this more profitable? g) The sales manager wants to drop prices by $2.50 per unit and spend an...
#6 Schwiesow Corporation has provided the following information: Cost per Unit Cost per Period Direct materials...
#6 Schwiesow Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.05 Direct labor $ 3.50 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 11,000 Sales commissions $ 1.00 Variable administrative expense $ 0.40 Fixed selling and administrative expense $ 5,500 For financial reporting purposes, the total amount of period costs incurred to sell 5,000 units is closest to: $5,500 $8,300 $12,500 $7,000 #3 Kesterson Corporation has provided the following information: Cost per...
Dorchester Company, on March 1, 2019 has a beginning Work in Process inventory of zero. All...
Dorchester Company, on March 1, 2019 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. On March 1, Dorchester started into production 15,500 units. At the end of the month there were 11,000 units completed and transferred into the Finished Goods Inventory. The ending WIP was 50% complete with respect to conversion. For the month of March the following costs were...
i know they dont write conversion cost but they write labor its the same thing correct,...
i know they dont write conversion cost but they write labor its the same thing correct, as far as the units involve is it total to 1,200,000 accounted for can you help me with this problem, please You are employed by Spirit Company, a manufacturer of digital watches. The company’s CFO has asked that you determine the costing information for past year. You have the following information available to you to complete this process. Materials are added to production at...
15. Brand Corporation uses the weighted-average method in its process costing system. The company has only...
15. Brand Corporation uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,800 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $2.95 for materials and $4.45 for labor and overhead, the total cost...
Pacific Siding Incorporated produces synthetic wood siding used in the construction of residential and commercial buildings....
Pacific Siding Incorporated produces synthetic wood siding used in the construction of residential and commercial buildings. Pacific Siding’s fiscal year ends on March 31, and the weighted-average method is used for the company’s process costing system. Financial results for the first 11 months of the current fiscal year (through February 28) are well below the expectations of management, owners, and creditors. Halfway through the month of March, the chief executive officer (CEO) and the chief financial officer (CFO) ask the...
On the basis of the following data, the general manager of Featherweight Shoes Inc. decided to...
On the basis of the following data, the general manager of Featherweight Shoes Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $17,000. Featherweight Shoes Inc. Product-Line Income Statement For the Year Ended April 30, 20Y8 1 Children’s Shoes Men’s Shoes Women’s Shoes Total 2 Sales $235,000.00 $300,000.00 $500,000.00 $1,035,000.00 3 Costs of goods sold: 4 Variable costs $130,000.00 $150,000.00 $220,000.00 $500,000.00 5 Fixed costs 41,000.00 60,000.00 120,000.00 221,000.00 6 Total cost of goods sold $171,000.00...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT