1, The cost of making 14 tables is $2,000. The cost of making 22tables is $2,640. What is the cost per table?
Write a linear equation that tells you the total cost, C , ofmaking x tables: C =
What is the total cost of making 17 tables? $
2, The cost of making 14 chairs is $1,090. The cost of making 26chairs is $1,570.
What is the cost per chair?
Write a linear equation that tells you the total cost, C , ofmaking x chairs: C =
If your total cost is $2,610, how many chairs did you make?
3,
1, The cost of making 14 tables is $2,000. The cost of making 22tables is $2,640. What is the cost per table?
Write a linear equation that tells you the total cost, C , ofmaking x tables: C =
What is the total cost of making 17 tables? $
2, The cost of making 14 chairs is $1,090. The cost of making 26chairs is $1,570.
What is the cost per chair?
Write a linear equation that tells you the total cost, C , ofmaking x chairs: C =
If your total cost is $2,610, how many chairs did you make?
3,
Related questions
Peter Schultz IV, president of Schultz Quality Furniture, takespride in carrying on a tradition of manufacturing custom qualityfurniture, a skill that was started by his great-grandfather insouthern Germany almost 100 years ago. In the 1930, Peter'sgrandfather immigrated to the Unites States and settled inPennsylvania where he incorporated the furniture business.
Throughout its existence, the company has focused on the highend of the furniture line and remained relatively small. They werenot interested in getting into the mass production of lesserquality items. Their workmanship and quality of product haveattracted a loyal following of customers and clients who arewilling to pay a premium for Schultz furnishings.
Over the years, Schultz has changed their focus and emphasis tomeet changing consumer preferences and desires, however, some ofthe original designs are still being manufactured in certainpieces. While the core business has remained strong and fairlyconsistent, the company will sometimes venture off into some othermarkets and specialties.
Just two years ago, Peter Schultz IV purchased the controllinginterest in Garden Patios Deluxe. This is a small company whichspecialized in making high-end patio and outdoor garden typefurniture. The furniture is sturdy, rust resistant and uses qualitymaterials which resist weathering and fading for a number of years.Peter thought this line of furniture would be a good compliment tohis company since Garden Patios Deluxe concentrate on the superiorquality furniture, have a relatively small operation, and support aloyal customer base. Also, with the general trend of the populationnow entertaining more and enjoying the outdoors, there seemed to bea sustainable market for patio furniture of this type.
So far, the operation of Garden Patios Deluxe has been asuccess. The company is bringing in a profit, but it has been alittle harder to attract a market than Peter first imagined. Thenorthern climate can tend to limit the outdoor season, and itseemed that people did not want to pay a lot of money for patiofurniture that would have to be in storage for half the year.
As a matter of course, Peter likes to review the manufacturingprocess for the different furniture lines about every eighteenmonths. He was interested in getting a detailed breakdown on theproduction cost and methods used to make the patio tables andchairs.
The material is a specially developed compound of structurallysound polymers, which is molded and heat treated by a supplier. Thecompound comes in four basic colors of beige, forest green, grayand white. The furniture pieces are constructed at the GardenPatios plant and parts like the fabric seats, glass inlays, andother decorative features are assembled.
The plant used in this manufacturing capacity is operating atabout 90% of capacity, although there are some seasonalfluctuations. The busy season is from November through May prior tothe outdoor entertainment season. In the summer, much time is spentin redesign and testing of new models or experimenting onvariations in existing product lines.
One of the most popular pieces made by Garden Patios Deluxe is asimple armchair. The chair has a molded frame that comes in about 4pieces along with a contoured fabric seat. The chairs can beretailed in a set with a table or sold separately. They areextremely comfortable and lightweight.
Peter wanted to know the actual cost of manufacturing a singlechair. The following unit cost are identified. The total costs arebased on a normal annual volume of 40,000 chairs. The currentselling price of the chairs is $75 each.
Item | Costs/Unit | Costs/Unit | Total Costs |
Materials | |||
Main Frame | 9.00 | $360,000 | |
Chair Arm | 2 @ $1.75 = 3.50 | 140,000 | |
Stand | 4.50 | 180,000 | |
Fabric Seat and Back | 5.00 | 200,000 | |
Related Supplies | 2.00 | 80,000 | |
Total Materials | $24.00 | 960,000 | |
Labor | |||
Fabric Labor | 30 min @ $10 = 5.00 | 200,000 | |
Assembly Labor | 20 min @ $12 = 4.00 | 160,000 | |
Total Labor | 9.00 | 360,000 | |
Fixed Overhead | |||
Manufacturing | 150% of Labor = 13.50 | 540,000 | |
Administrative | 25% of Material = 6.00 | 240,000 | |
Total Fixed Overhead | 19.50 | 780,000 | |
Total Manufacturing Cost | $52.50 | $2,100,000 |
Required: (please show your work)
1. If Schultz QualityFurniture sells all 40,000 chairs, how much will the company makeon the chairs?
2. If the company is ableto produce and sell 44,000 chairs, how much will the company makeon the chairs?
3. What is the marginalcost of making one additional chair?
4. During the off season,a special order for 3,000 chairs has come in from an overseesgovernment agency. However, because of the currency exchange rate,this company is only willing to pay $50.00 per chair, but Schultzwill have to pay a shipping and tariff cost of $5 per chair. ShouldSchultz Quality Furniture accept this order? How much money willthe company make or lose on this order?
5. The supplier whoprovides the special polymer material for the chairs has introduceda proposal to ship the chairs to Schultz fully assembled for $50.00per chair, which is less than the current manufacturing cost toSchultz of $52.50. All Schultz would have to do is send the chairsout to their customers. Should Schultz accept the offer? How muchmoney will the company make or lose on this offer?
6. The marketing managerbelieves that the customer base for chairs is pretty strong andthat a price increase to $80 per chair would only reduce demand by2,000 chairs. Should Schultz implement a price increase? If theactual price per chair were increased to $80, how far could theannual demand for chairs decline before Schultz would beindifferent between the $75 price and the $80 price?
7. What nonfinancialissues should be considered before decisions are made regarding theproduction and sale of these chairs?
Royal Company manufactures 19,000 units of part R-3 each yearfor use on its production line. At this level of activity, the costper unit for part R-3 is: |
| Directmaterials | $ | 4.20 |
| Direct labor | 8.00 | |
| Variablemanufacturing overhead | 2.30 | |
| Fixed manufacturingoverhead | 15.00 | |
| Total cost perpart | $ | 29.50 |
An outside supplier has offered to sell 19,000 units of part R-3each year to Royal Company for $44.00 per part. If Royal Companyaccepts this offer, the facilities now being used to manufacturepart R-3 could be rented to another company at an annual rental of$474,500. However, Royal Company has determined that $10 of thefixed manufacturing overhead being applied to part R-3 wouldcontinue even if part R-3 were purchased from the outsidesupplier. |
| Required: |
| a. | What is the total relevant cost of making the product?(Omit the "$" sign in your response.) |
| Total relevant costof making the product (19,000 units) | $ |
| b. | What is the total relevant costof buying the product? (Omit the "$" sign in yourresponse.) |
| Total relevant costof buying the product (19,000 units) | $ |
| c. | What is the opportunity cost ofmaking instead of buying? (Omit the "$" sign in yourresponse.) |
| Total opportunitycost | $ |
| d. | How much profits will increase or decrease if the outsidesupplierâs offer is accepted? (Input the amount as apositive value. Omit the "$" sign in your response.) |
| Profits would (Clickto select)decreaseincrease by | $ |
X Company is considering buying a part next year that theycurrently make. This year's total production costs for 3,100 unitsof this part were:
| Materials | $11,129 |
| Direct labor [all variable] | 10,788 |
| Variable overhead | 7,750 |
| Fixed overhead | 11,160 |
| Total | $40,827 |
A company has offered to supply this part for $10.75 per unit. If XCompany buys the part, $6,361 of the fixed overhead can beavoided.
14. If production next year is expected to be the same as thisyear, how much can X Company save by buying the part instead ofmaking it?
| Tries 0/3 |
15. If production next year is expected to be 3,600 units, how muchcan X Company save by buying the part instead of making it?
| Tries 0/3 |
