What is the net change in the budget of prevention costs

Assignment Help Financial Accounting
Reference no: EM13794766

Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $20,000 in training costs and $150,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000.The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. What is the net change in the budget of prevention costs if the procedures are automated in 20X6? Will management agree with the changes?

Reference no: EM13794766

Questions Cloud

Income summary was debited and the revenue account : The entry to close the revenue account(s) was entered in reverse - Income Summary was debited and the revenue account(s) was/were credited, this error will: A) before closing it, Income Summary will have a debit balance. B) the liabilities will be ov..
Purchase-related transactions : Purchase-Related Transactions- Mayn Co., a women's clothing store, purchased $27,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Mayn Co. returned $4,300 of the merchandise, receiving a credit memo, and then paid the..
Vehicle operating cost in the flexible budget : Ofarrell Snow Removal's cost formula for its vehicle operating cost is $1,840 per month plus $377 per snow-day. For the month of November, the company planned for activity of 14 snow-days, but the actual level of activity was 19 snow-days. The actual..
Determine t acct balances and then prepare trial balance : Journalize transactions for XYZ Enterprises for Oct. for the current year Oct. was the first month of business for this sole prop. Company Post all of the journal entries to T accts. Determine T acct balances and then prepare an Oct. 31 Trial Balance..
What is the net change in the budget of prevention costs : Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $20,000 in training costs and $150,000 in annu..
Outstanding shares affect the tax treatment of tender offer : In a tender offer, Alpha Corporation wants to exchange its voting common stock for all of Theta Corporation's single class of stock. Only 85% of Theta's shareholder agrees to tender their shares. After the tender, what options exist for Alpha to requ..
What is the present value of her winnings : Sally has just won the million-dollar Big Slam jackpot at a gambling casino. The casino will pay her $55,000 per year for 12 years as the payoff. If Sally can invest money at a 11% rate of return, what is the present value of her winnings?
The adjusted trial balance is prepared : The adjusted trial balance is prepared...

Reviews

Write a Review

Financial Accounting Questions & Answers

  Explain how do the transactions in divorce agreement affect

The divorce decree further states that alimony is to cease upon the death of the wife. In 2011, he made six payments. Explain how do the transactions in the divorce agreement affect Arnold's and Barbara's taxable income

  Hardly a day goes by without an article appearing on the

hardly a day goes by without an article appearing on the crises affecting many of our financial institutions in the

  Determine the amount of depreciation expense

Determine the amount of depreciation expense for the years ended December 31, 2010, 2011, and 2012, by the Straight-Line Method, the Units-of-Production Method, and the Double-Declining-Balance Method.

  Campbell one-half time to the business

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell one-half time to the business. Determine the division of $150,000 of net income under each of the following assumptions:

  Compute conversion costs for the month of july

Material are entered at the beginning of the process, Conversion costs are incurred uniformly during the process. Compute equivalent unit of production for materials and conversion costs for the month of July.

  Illustrate what is the company return on common stockholde

Carrier Company reported net income of $360,000 and paid dividends of $30,000 on its preferred stock during the current year. Illustrate w hat is the company's return on common stockholders' equity for the year?

  Calculate the predetermined overhead rate for 2012

Calculate the predetermined overhead rate for 2012, assuming Deglman Manufacturing estimates total manufacturing overhead costs of $980,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year.

  Determine the depreciable cost and the depreciation rate

Determine the depreciable cost, the depreciation rate, and the units-of-production depreciation for the year.

  On consolidated net income

Dennis Company is an 80%-owned subsidiary of Kay Industries. Dennis Company issued 10-year, 8% bonds in the amount of $1,000,000 on January 1, 20X1. On the distribution of income to the controlling and noncontrolling interests.

  Prepare the balance sheet and statement of changes

Prepare the income statement, balance sheet and statement of changes in retained earnings for the month of January, 2012 in their proper formats.

  Illustrate what effect on income should be reported

Goofy reclassified this investment as trading securities in December of 2006 when the market value had risen to $162,000. Illustrate what effect on 2006 income should be reported by Goofy for the Crazy Co. shares?

  Determine the best sales mix

Determine the best sales mix. Rank the services offered in order of their profitability and what would be the daily total contribution margin generated by Ortiz?

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