What is the difference in KCSB monthly costs

Assignment Help Accounting Basics
Reference no: EM132478231

Question - King City Specialty Bikes (KCSB) produces high-end bicycles. Costs to manufacture and market the bicycles at last year's volume level of 1,800 bicycles per month are shown in the following table:

Variable manufacturing per unit $229.00

Total fixed manufacturing $208,800

Variable nonmanufacturing per unit $51.00

Total fixed nonmanufacturing $270,000

KCSB expects to produce and sell 2,200 bicycles per month in the coming year. The bicycles sell for $640 each.

An outside contractor makes an offer to assemble 900 of KCSB's bicycles per month and ship them directly to KCSB's customers as orders are received from its sales force. It will charge KCSB $155 per bicycle. KCSB would provide the materials for each bicycle, but the outside contractor would assemble, box, and ship the bicycles. If KCSB accepts the offer, its variable manufacturing costs would be reduced by 45% for the 900 bicycles assembled by the outside contractor, and its variable nonmanufacturing costs for those 900 bicycles would be cut by 60%. In addition, it would be able to save $20,880 of fixed manufacturing costs; fixed nonmanufacturing costs would be unchanged.

KCSB's marketing manager thinks that it could sell 90 specialty racing bicycles per month for $6,000 each, and its production manager thinks that it could use the idle resources to produce each of these bicycles for variable manufacturing costs of $4,900 per bicycle and variable nonmanufacturing costs of $400 per bicycle.

REQUIRED - What is the difference in KCSB's monthly costs between accepting the proposal and rejecting the proposal?

Reference no: EM132478231

Questions Cloud

Compare annual financial reports : Select a government Organization , It is better to be a Saudi organization, (give introduction and mention the type of activity it does)
Report on talking to strangers by malcolm gladwell : Prepare one page report on Talking to strangers by Malcolm Gladwell
What would be the price he can sell it for : What would be the price he can sell it for, assuming the grown rate of dividends has remained at 10.72% forever and the required rate of return has remained at
Compare and contrast the views of management and accountants : Compare and contrast the views of management and accountants regarding the changes required by the Sarbanes-Oxley Act on internal controls
What is the difference in KCSB monthly costs : KCSB's marketing manager thinks that it could sell 90 specialty racing bicycles per month for $6,000 each, What is the difference in KCSB monthly costs
Find the two difference checks : Find the two difference checks, one for the last interest payment and one for the principal payment. Recall, you took a long position in the swap.
Completing the proposed budget for the next fiscal year : Completing the proposed budget for the next fiscal year for your Department - You will turn in a Word Document that justifies your expenses for every category
What would the profit or loss : The company's general pricing policy is to set prices at $113 per cubic yard. What would the profit or loss
Explain how IT Managers have to manage in four directions : What approach should an IT manager take when dealing with disputes, disagreements, or opposition between teams or individuals?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd