Reference no: EM13913600
One of the materials used in the production of Zets is obtained from a foreign supplier. Civil unrest in the supplier?s country has caused a cutoff in material shipments that is expected to last for three months. Barker Company has enough material on hand to operate at 25% of normal levels for the three-month period. As an alternative, the company could close the plant down entirely for the three months. Closing the plant would reduce fixed manufacturing overhead costs by 35% during the three-month period and the fixed selling expenses would continue at two-thirds of their normal level. What would be the impact on profits of closing the plant for the three-month period?
Contribution margin lost:
Fixed manufacturing Overhead cost:
Fixed selling cost:
Net disadvantage of closing the plant:
The company has 400 Zets on hand that were produced last month and have small blemishes. Due to the blemishes, it will be impossible to sell these units at the normal price. If the company wishes to sell them through regular distribution channels, what unit cost figure is relevant for setting a minimum selling price?
Relevant unit cost:
An outside manufacturer has offered to produce Zets and ship them directly to Barkers customers. If Barker Company accepts this offer, the facilities that it uses to produce Zets would be idle; however, fixed manufacturing overhead costs would continue at 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be reduced by 60%. Compute the unit cost that is relevant for comparison to the price quoted by the outside manufacturer.
Variable production costs:
Fixed manufacturing overhead cost:
Variable selling expense:
Total avoidable cost:
|
The employees of portonegra company earn wages
: The employees of Portonegra Company earn wages of $15,600 for the two weeks ending April 19. FIT taxes of $424 were withheld.
|
|
Are there any arbitrage opportunities
: Stock Q is selling at $50. It is expected to provide $2 dividend in 1 ½ months. A European call with strike price $48 and a European put with strike price $49 on Q are respectively selling at $0.2 and $0.7. Their maturities are in 3 months. Continuou..
|
|
Underlying stock and they are both exactly at the money
: A put and call option are written on the same underlying stock and they are both exactly at the money. Both are European options with the same expiration date, which is several months from now. The risk-free rate of interest is 1%. One of the followi..
|
|
Determine the target cost per unit
: Krystal Water requires a minimum rate of return of 19% on all investments. Determine the target cost per unit for the filter.
|
|
Outside manufacturer
: An outside manufacturer has offered to produce Zets and ship them directly to Barkers customers. If Barker Company accepts this offer, the facilities that it uses to produce Zets would be idle; however, fixed manufacturing overhead costs would contin..
|
|
Explaining the pros and cons of each strategy
: You think a stock’s price is going to fall. If you’re right, you could make money by. Write a few sentences explaining the pros and cons of each strategy.
|
|
Certain common stock currently sells
: A certain common stock currently sells for $50. A call option on that stock with X = $50 and an expiration in one year costs $6.41. A put option on that stock, also with X = $50 and a one-year expiration costs $5.42.
|
|
Prepare a per unit analysis of the differential costs
: Riggs Company purchases sails and produces sailboats. It currently produces 1,250 sailboats per year, operating at normal capacity, which is about 80 % of full capacity. Prepare a per unit analysis of the differential costs.
|
|
Inventory warehouse
: The goods were placed immediately in the inventory warehouse
|