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¶ … Ski Pro-Corporation, produces sells wholesalers a highly successful line water skis, decided diversify stabilize sales year. The company production cross-country skis. After considerable research, a cross-country ski line developed.
The table below summarizes the calculations in the two different scenarios. In scenario no.1, the company produces both the skis and the bindings. The costs for direct labor, direct material and total overhead are shown in the first column.
Skis and Bindings
Outsourced Bindings
Direct Labor
Direct Material
Total Overhead
Total Cost
The second column shows the costs of the company if making the bindings is outsourced to a subcontractor and purchased rather than internally produced. The costs for direct labor, direct material and total overhead were calculated by decreasing 10% for direct labor and total overhead and 20% for direct material from the costs for all these elements in scenario 1.
To the total cost, $10.50 was also added for each pair of skis. This represents the price paid to purchase the bindings from the subcontractor. In this case, the total cost is $79.5 (price of bindings included).
In the 2nd scenario,...
This means that it is better to select this option and buy the bindings rather than make them internally. The purchasing price of the bindings is lower than the costs involved in producing them. This is reflected in the overall total cost.
2. The maximum acceptable price for the Ski Pro-Corporation is $11.00 for the pair of bindings. First, the total cost for the ski production is calculated, taking into consideration the potential savings if the bindings production is outsourced. The total cost in this case is $69. The total cost if the bindings are produced internally is $80. As such, the maximum acceptable price for the Ski Pro-Corporation to pay for the bindings is $11, because in this case, the total cost would be equal to the cost of producing the bindings internally.
3. Everything that is produced over the 10,000 skis incurs the acquisition of the $10,000 equipment. This means that in order to calculate whether it is still profitable to purchase the bindings or not, we need to take into consideration the cost savings made by purchasing the bindings rather than producing them. As mentioned, these savings amount to $0.50 per pair of skis when the bindings are purchased.…
references)? Is it too high-end to outsource any of the components of the ski to an outside producer? If the market is not acceptable to such practices, the Ski Pro-Corporation would find itself in a position where most of its other competitors prefer complete internal production.
Finally, one needs to determine how the outside produced bindings would fit with the product itself, including in terms of the marketing and promotional campaign that the company would undertake. How is the product with outside bindings best described in a presentation of the new product the company is launching?
Problem 12-34-1. Gross margin is calculated as gross profit / revenue. Product a Product B Product C Product D Gross Margin 12,000 / 32,000 = 37.5% 17,600 / 88,000 = 20% 56,000 / 280,000 = 20% 63,000 / 144,000 = 43.75% The product that is the most profitable is Product D. 2. The best way to start this question is to figure out the price and COGS per unit for each product. For Product a, the price was $32,000 / 2900
33% 400000 53.33% 480000 53.33% FM 125,000 125,000 125,000 FSA 25,000 25,000 25,000 Net Income 170,000 28.33% 250,000 33.33% 330,000 36.67% 2. The manager's tabulation is incorrect because the manager has set $2 as the fixed cost per unit. This is only true at the 200,000 unit level. At the other levels, the fixed cost per unit will be lower, as fixed costs do not increase with production volume. 6-47. 1. In order to make this assessment, Dana needs to calculate which method is cheaper. The accounting for producing the parts
So for the 70,000 units completed in July: (70,000)(15 + 10.65) = $1,795,500 2. The ending works in progress is 20,000. The total cost should be (20,000)(25.65) = 513,000 Note: These figures represent the total cost of the goods, not the total cost in July of the goods. The question is worded a little bit funny so I wasn't sure which one it was intended to be. Problem 14-21. Problem 14-21 1 2 3 4 DM Inv, 2010 8 8 5 2 Purchased 5 9 10 8 Used 7 11 7 3 DM Inv,
b) 1) ($20-$5) = $15; $1,200,000 / 15 = 80,000 units 2) if the company wants to sell just 70,000 units, then the price needs to be calculated again using the same formula as was used above: 70,000P -- (70,000*5) -- 1,200,000 = 0 70,000P = 1,550,000 P = $22.15 c) 1) This question is a bit silly. The formula would have one variable, x, to represent both the old and new sides: 19x -- 5x
The passenger miles would be (1,500,000 * 1.1) = 1,650,000. The revenue per passenger mile would be $0.20 -- (.08*.2) = $0.184 So the actual revenue was (.184)*(1,650,000) = $303,600. Now we can calculate Flex for Actual Level, the third column. This is based on the flex budget figures, which were $0.20 in revenue per passenger mile. Variable expenses were 195,000 / 1,500, 000 = $0.13 per passenger mile in the
4) Consider a firm that has just built a plant, which cost $20,000. Each worker earns $5.00 per hour. a) Based on this information, fill in the table below. Number of Worker Hours Output Marginal Product Fixed Cost Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost 0 0 20,000 50 8 20000 20,250 5 5 10 20000 20,500 5 5 8 20000 20,750 5 5 6 20000 21,000 5 5 4 20000 21,250 5 5 85 1900 2 20000 21,500 5 5 71.67 1950 1 20000 21,750 5 5 62.14 b) In the example above, what price must the firm receive in order to keep producing in the short run? The price the firm must receive in the short run is the price that covers the variable cost, so the firm