Answer:
a-1. If the inspector position is eliminated, the defects will not be detected. These cost the company $11 to replace.
Defects per hour = 50 * 0.01 = 0.5 units
Cost per hour = 0.5 * 11 = $5.50
a-2. Based on costs alone, the inspection position should be eliminated. This is because the cost of having the Inspection position is $10 but it would only cost the company $5.50 if the position was not there so the cost of the inspection position is more than the cost incurred if it wasn't there.
b. = Inspection fees/ Units inspected per hour
= 10/50
= $0.50 per unit
c. Cost without Inspection is $5.50. With Inspection is $10.
Hourly Loss = 5.50 - 10
= -$4.50
Per unit loss = -4.50/50
= -$0.09
Once the prototype of Wainwright Industries' new riding lawnmower, made especially for women, passes concept testing, the next step is ________
A) commercialization
B) focus group surveys
C) concept development
D) post-testing
E) marketing strategy
Answer: commercialization
Explanation:
Concept testing is the stage at which survey is being carried out for a particular product. This is done in order to know how consumers will accept a new product before such product is finally introduced to the market.
Since the product has passed the concept testing, the next step will be commercialization. This is when the product is then introduced and the business is managed in order to make profit.
Answer:
E) marketing strategy
Explanation:
When a new product is the be introduced to the market there are various stages the it should undergo to ensure it has high quality and is well recieved by the consumer.
The various steps are:
- idea development
- focus group survey
- concept testing
- market strategy development
- product development
- test marketing
- commercialisation
When the new product is confirmed as a viable one marketing strategy development is started to see how product can best be delivered to the consumer
This stage comes after concept testing.
In the Keynesian model, when government decreases its spending by $20 billion, and it decreases taxes by $30 billion, and the MPC is .75, by how much will total spending in the economy change?A) Total spending will increase by $70 billion.
B) Total spending will decrease by $270 billion.
C) Total spending will increase by $200 billion.
D) Total spending will increase by $10 billion.
E) Total spending will decrease by $470 billion.
Answer:
D) Total spending will increase by $10 billion.
Explanation:
The computation is shown below:
As we know that
Multiplier = 1 ÷ 1 -MPC
= 1 ÷ 1 - 0.75
= 1 ÷ 0.25
= 4
When there is a decrease in tax so the total spending increase is $30 billion
And, the reduction in spending because of the reduction in the government expenditure is $20 billion
So, the increase in total spending is
= $30 billion - $20 billion
= $10 billions
hence, the correct option is D.
(TCO C) For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University's labs; however Mountain Home did not buy them because the _____ costs were too high.a. transactional.
b. opportunity.
c. marginal.
d. switching.
Answer:
d. switching.
Explanation:
Since in the question it is mentioned that Mountain university used IBM computers also the apple computers offered them a better machiner at a lesser cost but the university did not buyed as the switching cost is too high
Bcz from exchanging from IBM computer to Apple computers the cost is high and that cost we called as switching
Hence, the correct option is d.
Price Quantity Demanded by Michelle Quantity Demanded by Laura Quantity Demanded by Hillary$5 5 4 11$4 6 6 13$3 7 8 15$2 8 10 17$1 9 12 19$0 10 14 21If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases bya. 2 units.b. 4 units.c. 5 units.d. 3 units.
Answer:
The correct option is c. 5 units.
Explanation:
Note: The data in this question are merged together. They are therefore sorted before the question is answered. See the attached pdf file for the complete question with the sorted data.
The explanation to the answer is now given as follows:
Note: See the attached excel file for the calculation of change in price and Quantity Demanded from the bottom.
From the table in the question and the attached excel file, whenever price changes (falls or increases) by $1, we have:
Change in Quantity Demanded by Michelle = 1
Change Quantity Demanded by Laura = 2
Change Quantity Demanded by Hillary = 2
Total change in quantity demanded = Change in Quantity Demanded by Michelle + Change Quantity Demanded by Laura + Change Quantity Demanded by Hillary = 1 + 2 + 2 = 5 units
From the above calculation therefore, if the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by the total change in quantity demanded, i.e. by 5 units.
Therefore, the correct option is c. 5 units.
On December 28, 2021, Tristar Communications sold 17 units of its new satellite uplink system to various customers for $25,000 each. The terms of each sale were 2/10, n/30. Tristar uses the gross method to account for sales discounts.In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022. By how much in 2022ï¼ income before tax will be reduced byï¼
Answer:
Since the company records its transactions using hte gross method, any discounts will affect 2022 earnings. The journal entries to record these sales are:
December 28, 2021, 17 units sold
Dr Accounts receivable 425,000
Cr Sales revenue 425,000
January 6, 2022, invoices collected
Dr Cash 416,500
Dr Sales discounts 8,500
Cr Accounts receivable 425,000
Question 1 of 10
What is one way banks can recover money they have loaned to someone who
has stopped making payments?
O A. Banks can require the borrower's friends and family to pay off the
loan.
B. Banks can have collection agencies seize part of the borrower's
income.
C. Banks can force the borrower's employer to fire him or her
immediately
D. Banks can make the borrower work at the bank for no salary.
Answer:
B. Banks can have collection agencies seize part of the borrower's income.
Explanation:
Hope it helps
Banks can recover money they have loaned to someone who has stopped making payments the banks can have collection agencies seize part of the borrower's income. Thus, option (b) is correct.
What is bank?
The term Bank refers to a financial institution that deals with money. For the aim of saving and investing, the individual deposits money into a personal account. Additionally, banks can offer loans and ATM services. There are two different kinds of banks, such as public and private ones.
The debtors give the loan to the bank, but as long as someone is not returned on payment, the bank can hire collection agencies. The collection agencies' main role is to collect money with interest from debtors.
Therefore, option (b) is correct.
Learn more about on banks, here:
https://brainly.com/question/14042269
#SPJ5
To prevent everyone from passively agreeing with each other in quarterly department meetings, one person will now be required to openly point out all the possible things that could go wrong with each new project.
2. HomeSafe sells and installs wireless home security systems in 5 districts across the Midwest. HomeSafe has about 20 sales reps in each district. At the end of each year, the top sales rep from each district wins an extra week of paid vacation time to use in the following year.
3. Your organization is in a rut. Everyone is doing the same things they’ve always done and there’s nothing creative or groundbreaking happening. You have two employees retiring soon and decide to replace them with people from completely different industries to bring in novel perspectives and keep everyone on their toes.
4. People in your office seem to be afraid to try new things, so the company sets up a monthly brainstorming session where employees can safely present wild and innovative new ideas. The sessions happen after work hours, but everyone who attends and contributes at least one new idea gets to take the last Friday of the month off of work.
5. Some of your employees want to bring the company’s training program entirely online (option 1), while others think it’s best to keep a face-to-face component in addition to offering a few online sessions (option 2). Due to resource constraints, the company can only choose one option. The executives decide to assign one upper manager to argue for option 1 and another to argue for option 2. This will help them to gather the necessary facts to make a final call.
Question Completion:
Managers are constantly confronted with conflicts—both functional and dysfunctional-while trying to reach organizational goals. This activity is important because effective management requires the ability to stimulate functional conflicts.
The goal of this exercise is to challenge your knowledge of the techniques for stimulating functional conflict.
Select the most appropriate technique for stimulating functional conflict for each of the items listed below.
Options:
Spur competition among employees
Change the organization's culture and procedures
Bring in outsiders for new perspectives
Use programmed conflict
Answer:
1. Change the organization's culture and procedures
2. Spur competition among employees
3. Bring in outsiders for new perspectives
4. Spur competition among employees
5. Use programmed conflict
Explanation:
Functional workplace conflicts are purposeful conflicts that spur healthy, constructive, and problem-solving disagreements between functional groups or individuals. They help to identify problems early, as these regulated conflicts trigger some actions that may expose other underlying problems. They also improve productivity by galvanizing the workforce to improve their individual insights, relationships with others, and commitment to the achievement of organizational success. Functional conflicts should be encouraged by management, while efforts should be exerted to reduce dysfunctional conflicts through appropriate mediations.
Calculate the yield to maturity of a zero coupon bond with a face value (par value) of $1,000, maturing in 15 years and selling for a price of $525.75.a. 5.62%.b. 4.38%.c. 8.74%.d. 15.26%.e. 16.27%.
Answer:
YTM = 0.043793 or 4.3793% rounded off to 4.38%
Explanation:
The yield to maturity or YTM is the yield or return that an investor can earn on the bond if the bond is purchased today and is held till the bond matures. The formula to calculate the Yield to maturity of a zero coupon bond is as follows,
YTM = [ (( F / PV)^1/n) - 1 ]
Where,
F is the Face value of the bond
PV is the current value of the bond
n is the number of years to maturity
YTM = [ (( 1000 / 525.75)^1/15) - 1 ]
YTM = 0.043793 or 4.3793% rounded off to 4.38%
All of the following are true except:___________
a. A favorable labor efficiency variance could result from using higher quality materials that result in fewer inspections.
b. A favorable labor rate variance could result from lower wage workers quitting.
c. A favorable materials price variance could result from purchasing identical materials from another supplier at a lower price.
d. An unfavorable materials usage variance could result from not efficiently utilizing raw materials, thus causing waste.
e. An unfavorable labor efficiency variance can be caused by machine downtime, and poor quality materials.
Answer:
b. A favorable labor rate variance could result from lower wage workers quitting.
Explanation:
The reason is because Lower wage workers quitting will often result in increase labour cost and the Increase in labour cost will be resulted in unfavorable labour variance. Hence, the option B is incorrect.
Pule purchases four bottles of bathroom cleaner for $3 each. The maximum prices she would have been willing to pay for each bottle are $6 for the first bottle, $5 for the second bottle, $4 for the third bottle, and $3 for the fourth bottle. The marginal cost of producing the bottles is $2.50. What is Pule's consumer surplus on the third bottle of bathroom cleaner?a. $.50 b. $6c. $1d. $0
Answer:
The correct answer is:
$1 (d)
Explanation:
A consumer surplus is the difference between what a consumer is willing to pay and what they are able to pay for a particular good or service. It is simply the extra benefit gained by the consumer for paying lesser for a good or service than what they actually intended to pay. Based on this, it is noticed that consumer surplus tends to increase as the market price of goods/services fall, and reduce as their price increases. It is represented mathematically as:
Consumer surplus = (Price willing to pay) - (Actual price paid)
In this example, the consumer surplus is calculated thus:
price willing to pay for third bottle = $4
Price paid = $3
Consumer surplus = 4 - 3 = $1
The point where marginal cost curve crosses the ____________ and ___________ curve is where the profit maximizing quantity demanded (dropping down to the X-axis) and price (going up to the demand curve or average revenue curve and over to the Y-axis) are determined.
Answer:
This question is incomplete, the options are missing and the word "and" between the gaps is wrong and should not be there.
The options are the following:
a) Marginal revenue
b) Average revenue
c) Variable cost
d) Fixed cost
And the correct answer is the option A: Marginal revenue.
Explanation:
To begin with, in the microeconomics theory the marginal analysis is very well known for being one of the reasons why the price is determined in the markets under the laws of economic sciences. Moreover, this marginal analysis focus on the interaction between all the curves that represents the costs and revenues that are related to the consumer of a good or service in a particular market. In the graphic, the point where the marginal cost curve equals the marginal revenue curve is where the profit maximizing quantity demanded and the price are the same and therefore those are the equilibrium numbers.
What are some types of performance that a manaer would have to control for a home health care agency? A. A health insurance companyB. A primary care clinicC. An outpatient surgery facilityD. A mental health counseling center E. A medical supply store
Answer:
A. A health insurance company
B. A primary care clinic
E. A medical supply store
Explanation:
Management control can be defined as how the role of various individuals and groups within an organization are being monitored, controlled, and regulated to perform specific actions and avoid other non-essential activities to accomplish the organization's goals.
For a health care agency, some types of performance the manager would have to control for a home health care agency are:
A health insurance company:
Their role is to ensure that high health care cost is made affordable to individuals.
They must also ensure that a top-notch health service is being provided to the patients.
A primary care clinic:
They are responsible for the prevention of disease outbreaks and counseling their clients about how to take good care of their health conditions.
A medical supply store:
They serve as an inventory supply unit that are liable for the distribution of medical supplies to the individuals.
Rearden Metal has a bond issue outstanding with ten years to maturity, a yield to maturity of 8.6%, and a B rating. The corresponding risk-free rate is 3% and the market risk premium is 6%. Assuming a normal economy, the expected return on Rearden Metal's debt is closest to:______
a. 0.6%
b. 1.6%
c. 4.6%
d. 6.0%
Answer:
c. 4.6%
Explanation:
the question is incomplete, since it is missing the average beta for B rated bonds, so I looked for similar questions: average beta for B bonds = 0.26 and since we are assuming a normal economy, we should use it:
the expected return on the bonds = risk free rate + (average beta of B rated bonds x risk premium)
expected return = 3% + (0.26 x 6%)
expected return = 3% + (0.26 x 6%) = 3% + 1.56% = 4.56% ≈ 4.6%
Destin Company signs a contract to manufacture a new 3D printer for $80,000. The contract includes installation which costs $4,000 and a maintenance agreement over the life of the printer at a cost of $10,000. The printer cannot be operated without the installation. Destin Company as well as other companies could provide the installation and maintenance agreement. What are Destin Company's performance obligations in this contract?
Answer:
From the question, the contract stipulates that Destin Company has three (3) performance obligations.
1. Manufacture a new 3D printer
2. Installation of the 3D printer.
3. Maintenance of the 3D printer over the life of the printer.
All three of these are to be performed by Destin Company for the client they signed the contract with.
About how frequently does Hope receive a paycheck?
Answer:
every 2 weeks
Explanation:
A paycheck is a salary the employee or worker gets. Hope receives a paycheck every 2 weeks.
What is a paycheck?A paycheck means the salary or wages an employee or worker gets for doing the work under their employment by the employer.
The frequency of a paycheck usually depends on the period of work. i.e a month in most cases but here Hope receives a paycheck every 2 weeks.
Therefore, the above statement aptly describes the paycheck.
Learn more about Paycheck here:
https://brainly.com/question/24938000
Which of the jobs listed is likely to be the most influenced by creativity and the creative process?A) Warehouse workerB) ProgrammerC) ReceptionistD) Office manager
Answer:
C) Programmer
Explanation:
Creative process could be regarded as
a process of unconscious and conscious mind, it is a simple term of inspiration. It involves critical thinking and ability to solve problems with one skills. According to Graham Wallas who model a creative process, in the book of " The Art of Thought" told us about the stages involves in the creative process which are;
✓preparation (or saturation)
✓incubation
✓ illumination
✓ verification (or implementation).
Out of the given options only programming can be regarded as a creative process.
Answer:programmer
Explanation:
The ________ summarizes the tasks to be accomplished and who is responsible for what on a project.
Answer:
Responsibility matrix
Explanation:
The responsibility matrix deals with the various kind of the responsibilities that specified the task that should be achieved and the type of responsibility that each one of them is responsible for their work
It is also known as the linear responsibility chart
Therefore the responsibility matrix is the answer and the same is to be considered
Union local school district has bonds outstanding with a coupon rate of 3.2 percent paid semiannually and 16 years to maturity. The yield to maturity on these bonds is 3.7 percent and the bonds have a par value of $5,000. What is the dollar price of the bonds?
Answer:
Bond Price= $4,700.15
Explanation:
Giving the following information:
coupon rate= 0.032/2= 0.016
YTM= 0.037/2= 0.0185
Number of periods= 16*2= 32
Par value= $5,000
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 80*{[1 - (1.0185^-32)] / 0.0185} + (5,000/1.0185^32)
Bond Price= 1,919.05 + 2,781.10
Bond Price= $4,700.15
Answer:
4700.15
Explanation:
Using BA calculator:
N=2*16=32 (because semiannually)
I/Y=3.7%/2=1.85% (because semiannually)
PMT=3.2%/2*5000=1.6%*5000=80
FV=5000
Compute PV=4700.15
Peter, has discovered another wine, wine D. Wine drinkers are willing to pay 45 dollars to drink it right now. The amount that wine drinkers are willing to pay will rise by 15 dollars each year that the wine ages. The interest rate is 10%. How much would Peter be willing to pay for the wine if he buys it as an investment? (Pick the closest answer.)
a. 76 dollars
b. 45 dollars
c. 150 dollars
d. 495 dollars
e. 71 dollars
Answer:
e. 71 dollars
Explanation:
Peter was willing to but the wine for $45
In a year, there is an increase of $15 = $45 + $15 = $60
The interest rate of 10% of $60 = $6
Total = $66 ~ $70
Therefore, the amount he is willing to pay for the win if he buys it as investment would be 71 dollars.
Martinez Corporation purchased machinery on January 1, 2022, at a cost of $268,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $31,800. The company is considering different depreciation methods that could be used for financial reporting purposes.
(SEE PICTURE)
Answer:
see below
Explanation:
1. Depreciation using the straight-line method.
Under the straight-line method, depreciation is a constant figure in every year of an asset's useful life.
The calculation of depreciation expense is by establishing the depreciable amount, which is the asset cost minus salvage value.
Depreciable amount = Asset cost - Salvage value.
In this case
Depreciable amount = $268,000 - $31,800
=$236,200
The depreciation rate = 1/4 x 100 = 25%
Depreciation per year
=25/100 x $236,200
=$59,050
year Depreciable cost rate Amount
2022 $236,200 25% $59,050
2023 $236,200 25% $59,050
2024 $236,200 25% $59,050
2025 $236,200 25% $59,050
2. Depreciation under the double-declining method.
The double-declining method uses twice the rate of the straight-line depreciation method.
The depreciation rate for the straight-line method is 25%, double-declining will use 50%. The salvage value is $31,800. The asset is depreciated until the salvage value is achieved.
year Depreciable cost rate Amount
2022 $268,000 50% $134,000
2023 $134,000 50% $67,000
2024 $67,000 50% $33,500
2024 $33,500 - $1,700
Balance : salvage value of $31,800
b The straight-line method would have the highest income reported in 2022. It reports less depreciation expense.
c. both Methods will report the same amount of income over the 4 year period.
Investment in an equipment project yields a net present worth of (–$150) at 15% interest rate and $95 at 20% interest rate. Calculate the internal rate of return on this investment.
Answer:
18.067%
Explanation:
Let , i = 15% , then NPV = -$150 ,
When i = 20%, NPV = $95 A
At IRR , let the NPV = 0
Now, using the linear interpolation method we get
20% - 15%/ IRR -15 = 95-(-150) / 0-(-150)
20% - 15%/ IRR -15 = 245 / 150
5 / IRR -15 = 1.63
1/IRR -15 = 0.326
1/0.326 = IRR - 15
3.067 = IRR -15
IRR = 3.067+ 15
IRR = 18.067%
Given aggregate supply, when there is an increase in aggregate demand, it leads to
Answer:
demand pull inflation is the answer
The adjusted trial balance of Sunland Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2022: Sales Revenue $903,400; Freight-Out $13,700; Sales Returns and Allowances $22,000; and Sales Discounts $15,400. Prepare the sales section of the income statement.
Answer and Explanation:
The preparation of the sales section of the income statement is presented below:
Income Statement
For the year ended
Sales
Sales revenue $903,400
Less:
Sales Discount $15,400
Sales return & allowances $22,000
Net Sales $866,000
hence the net sales is $866,000
The freight out would not be considered. Hence, ignored it
identify three of the many shared ethical standards among businesses that are incorporated in codes of ethics
Answer:
c. Social responsibility, fair pricing and truth in advertising.
Explanation:
The ethical standards shared by organizations that are incorporated into codes of ethics are: Social responsibility, fair price, truth in advertising.
A company needs to be ethical and transparent, this includes all its internal and external processes and systems. A company's social ethics can be demonstrated through responsibility to its stakeholders, which means that the company must promote the development of its employees, society and the environment.
The fair price refers to fair competition and the practice of prices consistent with its products and services, acting as a promoter to improve the quality of life of the population and enabling economic strengthening.
The truth in advertising corresponds to organizational transparency in promoting products and services consistent with what they offer in terms of price, quality, benefits, etc.
A company that complies with such ethical standards is much better positioned in the market and has a higher level of reliability by investors and consumers.
Answer: C. Social responsibility, fair pricing and truth in advertising.
Explanation:
Bill Darby started Darby Company on January 1, 2016. The company experienced the following events during its first year of operation:
a. Earned $1,600 of cash revenue.
b. Borrowed $3,000 cash from the bank.
c. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and an 10 percent annual interest rate.
Required:
a. What is the amount of interest payable at December 31, 2016?
b. What is the amount of interest expense in 2016?
c. What is the amount of interest paid in 2016?
Answer:
Darby Company
a. The amount of interest payable at December 31, 2016 is $100.
b. The amount of interest expense in 2016 is $100.
c. The amount of interest paid in 2016 is $0.
Explanation:
a) Data and Calculations:
Notes Payable to the bank = $3,000
Interest rate = 10%
Period of note = 1 year
Issue date = September 1
Interest on the note = $3,000 * 10% * 4/12 = $100
b) The interest payable in 2016 equals the interest expense for 2016. From the calculations, there is no payment for interest expense in 2016, that is why the interest payable equals the interest expense.
15-9: Harris Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $3 million investment. These projects have different levels of risk, and therefore different costs of capital. Their projected IRRs and costs of capital are as follows: Project A: Cost of capital: 17%; IRR: 20% Project B: Cost of capital: 13%; IRR: 14% Project C: Cost of capital: 7%; IRR: 9% Haris intends to maintain its 35% debt and 65% common equity capital structure, and its net income is expected to be $7,500,000. If Harris maintains its residual dividend policy (with all distributions in the form of dividends), what will its payout ratio be?
Answer:
Its payout ratio will be 22%
Explanation:
Residual dividend policy is a policy where a company uses the residual equity to fund dividend payments.
Accept Project A, B and C as they all have higher Cost of capital than the IRR
The total investment = $3,000,000 * 3 = $9,000,000
Dividend = Earnings - Investment in equity = $7,500,000 - 65%*$9,000,000 = $7,500,000 - $5,850,000 = $1,650,000
Dividend payout ratio = Dividend / Total earnings = $1,650,000 / $7,500,000 = 0.22 = 22%
When markets fail, public policya. can do nothing to improve the situationb. can potentially remedy the problem an increase economicefficiency.c. can always remedy the problem and increase economicefficiency.d. can in theory, remedy the problem, buy in practice, publicpolicy has proven to be ineffective
Answer:
b. can potentially remedy the problem an increase economic efficiency.
Explanation:
A market failure can be defined as a situation in which the market fails to produce an efficient level of output required to meet the demands of the consumers or customers.
This ultimately implies that, a market failure arises when there is inefficiency in the distribution or allocation of goods and services in a free market. Thus, the demand of the consumer of these goods and services are not being met with the level of supply (output) required i.e the forces of demand and supply are not efficient in producing the level of output required by the economy.
Some of the causes of market failure are imperfect information, monopoly, oligopoly, externalities etc.
Hence, when markets fail, public policy can potentially remedy the problem an increase economic efficiency.
Some of the public policy are pollution permits, government price controls, advertising etc.
Casey Electronics has a piece of machinery that costs $300,000 and is expected to have a useful life of 6 years or 40,000 hours. Residual value is expected to be $50,000.Using the units-of-production method, what is depreciation expense for the first year assuming it was used 6,000 hours?a) $37,500b) $70,000c) $81,000d) $41,667
Answer:
a) $37,500
Explanation:
In order to determine the depreciation for year 1 based on the units-of-production method, we apply the formula below:
Annual Depreciation= Depreciable Value × Units produced during the year /Estimated total production
Depreciable Value = Original cost – Scrap value
depreciable value=$300,000-$50,000=$250,000
Units produced during the year=6,000 hours
Estimated total production in hours=40,000 hours
first-year depreciation=$250,000*6000/40000
first-year depreciation=$ 37,500.00
Paid cach Rs 900 after deducting 10% cash discount
Answer:
I'm assuming you're looking for the original price? That would be $990 before the 10% discount.
Explanation:
The Backwoods American company in Problem 2.1 produces approximately 20,000 parkas annually. The quality management program the company implemented was able to improve the average percentage of good parkas produced by 2% each year, beginning with 83% good-quality parkas in 2012. Only about 20% of poor-quality parkas can be reworked.
Total (not per parka) direct manufacturing cost is given below:
Year 2003 2004 2005 2006 2007
Direct Manufacturing Cost $420,900 $423,400 $424,700 $436,100 $435,500
A) Compute the product yield for each of the five years.
B) Using a rework cost of $12 per parka, determine the manufacturing cost per good parka for each of the five years. What you can you conclude about the improvement process?
Answer:
a. 2003 product yield = 20,000(0.83) + 20,000 (1 - 0.83)(0.20)
= 16,600 + 680
= 17,280 parkas
2004 product yield = 20,000*(0.85) + 20,000*(0.15)(0.20)
= 17,000 + 600
= 17,600 parkas
2005 product yield = 20,000*(0.87) + 20,000*(0.13)(0.20)
= 17,400 + 520
= 17,920 parkas
2006 product yield = 20,000*(0.89) + 20,000*(0.11)(0.20)
= 17,800 + 440
= 18,240 parkas
2007 product yield = 20,000*(0.91) + 20,000*(0.09)(0.20)
= 18,200 + 360
= 18,560 parkas
b. 2003 manufacturing cost per good parka = 420,900 + 12*(20,000)(0.17)(0.20) /17,280
= 420,900 + 12 (680) / 17,280
= 429,060 /17,280
= $24.83
2004 manufacturing cost per good parka = 423,400 + 12*(600) /17,600
= 430,600 /17,600
= $24.47
2005 manufacturing cost per good parka = 424,700 + 12*(520) / 17,920
= 430,940 /17,920
= $24.05
2006 manufacturing cost per good parka = 436,100 + 12*(440) / 18,240
= 441,380 /18,240
= $24.20
2007 manufacturing cost per good parka = 435,500 + 12 *(360) /18,560
= 439,820 / 18,560
= $23.70