View the step-by-step solution to:

ACCT520 Classroom Quiz: Chapters 14 & 1 Name: ______________________ 1. FP Company manufactures fine paint sprayers for commercial painting....

FP Company manufactures fine paint sprayers for commercial painting. FP has the capacity to produce 650 units per month and is currently operating at 92% of capacity.
ACCT520 Classroom Quiz: Chapters 14 & 1 Name: ______________________ Page 1 1. FP Company manufactures fine paint sprayers for commercial painting. FP has the capacity to produce 650 units per month and is currently operating at 92% of capacity. FP’s Super Duty Sprayer (SDS) sells for $325 per unit. Total costs to produce a SDS unit are $275 per unit. Monthly fixed costs equal $44,850 per month. FP Company has received an offer from Spring Inc. to buy 50 Super Duty Sprayers. The special offer is for $250 per unit. Answer each of the following and show supporting calculations for your answers. a. What are the relevant costs per unit to analyze this special offer? b. For the short-run, should FP accept or reject Spring’s offer? c. For the long-run, should FP accept or reject Spring’s offer?
Background image of page 1
ACCT520 Classroom Quiz: Chapters 14 & 1 Name: ______________________ Page 2 2. BestCo manufactures radio components. Current production is 10,000 components per year. BestCo is considering incurring additional final inspection costs of $1 per unit before delivery to customers. The additional inspection should reduce the defective rate from 3.0% to 1.0%. If a defective unit is found, it is scrapped at no additional cost and materials cannot be reused. The manufacturing costs before the final inspection are $200 per unit. Currently external failure costs are $40 per defective unit. a. Prepare a cost/benefit analysis to justify if management should incur the additional final inspection costs? Show calculations to support your answer. b. If BestCo were to measure the improvements in the number of defective units, what perspective on the Balanced Scorecard would report this measure?
Background image of page 2
Sign up to view the entire interaction

Top Answer

The solution is... View the full answer

12.docx

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online