Answer the question.
A manufacturing plant is planning to replace outdated equipment with more energy-efficient and environmental-friendly equipment. Two models are under consideration. Model A is sold for $159,000 and can produce at an optimum speed of 78 unit/hour. Model B is sold for the same price, but can produce at an optimum speed of 76 unit/hour. Model A requires 6 hours of maintenance for every 4300 units produced, while Model B requires 5 hours of maintenance for every 3300 units. The maintenance cost for both models is $100 per hour. The variable operating cost is $340 per hour for Model A and $290 per hour for Model B. Due to obsolete parts, there is a sunk cost of $2700 for model A and $1900 for Model B . If the price of the product is $150 per unit and the company expects to sell 145,000 units each year, which model should be selected?
Answer the question.
A manufacturing plant is planning to replace outdated equipment with more energy-efficient and environmental-friendly equipment. Two models are under consideration. Model A is sold for $159,000 and can produce at an optimum speed of 78 unit/hour. Model B is sold for the same price, but can produce at an optimum speed of 76 unit/hour. Model A requires 6 hours of maintenance for every 4300 units produced, while Model B requires 5 hours of maintenance for every 3300 units. The maintenance cost for both models is $100 per hour. The variable operating cost is $340 per hour for Model A and $290 per hour for Model B. Due to obsolete parts, there is a sunk cost of $2700 for model A and $1900 for Model B . If the price of the product is $150 per unit and the company expects to sell 145,000 units each year, which model should be selected?
Related questions
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: |
| a. | The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9,100, 22,000, 24,000, and 25,000 units, respectively. All sales are on credit. | |||
| b. | Forty percent of credit sales are collected in the month of the sale and 60% in the following month. | |||
| c. | The ending finished goods inventory equals 20% of the following monthâs unit sales. | |||
| d. | The ending raw materials inventory equals 10% of the following monthâs raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. | |||
| e. | Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. | |||
| f. | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. | |||
| g. | The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $61,000. Please Answer:
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| [The following information applies to the questions displayed below.] |
| Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: |
| Direct material: 6 pounds at $9.00 per pound | $ | 54.00 |
| Direct labor: 5 hours at $13.00 per hour | 65.00 | |
| Variable overhead: 5 hours at $3.00 per hour | 15.00 | |
| Total standard variable cost per unit | $ | 134.00 |
| The company also established the following cost formulas for its selling expenses: |
| Fixed Cost per Month | Variable Cost per Unit Sold | |||||
| Advertising | $ | 260,000 | ||||
| Sales salaries and commissions | $ | 120,000 | $ | 11.00 | ||
| Shipping expenses | $ | 4.00 | ||||
| The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 25,000 units and incurred the following costs: |
| a. | Purchased 180,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. |
| b. | Direct-laborers worked 115,000 hours at a rate of $14.00 per hour. |
| c. | Total variable manufacturing overhead for the month was $350,250. |
| d. | Total advertising, sales salaries and commissions, and shipping expenses were $267,000, $350,750, and $105,000, respectively. |
1. What raw materials cost would be included in the companyâs flexible budget for March?
2. What is the materials quantity variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
3.What is the materials price variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
4. If Preble had purchased 185,000 pounds of materials at $8 per pound and used 180,000 pounds in production, what would be the materials quantity variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
