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Ba510 Week 8 Final

  • Date Submitted: 04/20/2016 08:34 PM
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BA510 Week 8 FINAL

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Problem 1
Only the incremental costs and benefits are relevant. In particular, only the variable manufacturing overhead and the cost of the special tool are relevant overhead costs in this situation. The other manufacturing overhead costs are fixed and are not affected by the decision.

Per Unit Total for 10 Bracelets
Incremental revenue $349.95 $3,499.50
Incremental costs:
Variable costs:
Direct materials $143.00 1,430.00
Direct labor 86.00 860.00
Variable manufacturing overhead 7.00 70.00
Special filigree     6.00     60.00
Total variable cost $242.00 2,420.00
Fixed costs:
Purchase of special tool     465.00
Total incremental cost 2,885.00
Incremental net operating income $   614.50

Even though the price for the special order is below the company's regular price for such an item, the special order would add to the company's net operating income and should be accepted. This conclusion would not necessarily follow if the special order affected the regular selling price of bracelets or if it required the use of a constrained resource.







Problem 3
July August September Quarter
Budgeted sales in units 30,000 45,000 60,000 135,000
Add desired ending inventory* 4,500 6,000 5,000   5,000
Total needs 34,500 51,000 65,000 140,000
Less beginning inventory 3,000 4,500 6,000   3,000
Required production 31,500 46,500 59,000 137,000

*10% of the following month’s sales in units.

Problem 4
1. Krispin Corporation
Manufacturing Overhead Budget

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Budgeted direct labor-hours 5,000 4,800 5,200 5,400 20,400
Variable overhead rate × $1.75 × $1.75 × $1.75 × $1.75 × $1.75
Variable manufacturing overhead $8,750 $8,400 $9,100 $9,450 $35,700
Fixed manufacturing overhead 35,000 35,000 35,000 35,000 140,000
Total...

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