City University Of New York Operations And Supply Chain Management Assignment Help - Corporation
Question - Page 2
1.(TCO D) Seebach Corporation has two major business segments Apparel and
Accessories. Data concerning those segments for June appear below.
Sales revenues, Apparel $700,000
Variable expenses, Apparel $406,000
Traceable fixed expenses, Apparel $98,000
Sales revenues, Accessories $710,000
Variable expenses, Accessories $312,000
Traceable fixed expenses, Accessories $107,000
Common fixed expenses totaled $292,000 and were allocated as follows: $155,000 to the
Apparel business segment and $137,000 to the Accessories business segment.
Required:
Prepare a segmented income statement in the contribution format for the company. Omit
percentages; show only dollar amounts. (Points : 15)
2.(TCO D) Wryski Corporation had net op
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erating income of $150,000 and average
operating assets of $500,000. The company requires a return on investment of 19%.
Required:
i. Calculate the company's current return on investment and residual income.
ii. The company is investigating an investment of $400,000 in a project that will generate
annual net operating income of $78,000. What is the ROI of the project? What is the
residual income of the project? Should the company invest in this project? (Points : 15)
3.(TCO D) Tjelmeland Corporation is considering dropping product S85U. Data from the
company's accounting system appear below.
Sales $360,000
Variable Expenses $158,000
Fixed Manufacturing Expenses $119,000
Fixed Selling and Administrative Expenses $94,000
All fixed expenses of the company are fully allocated to products in the company's
accounting system. Further investigation has revealed that $55,000 of the fixed
manufacturing expenses and $71,000 of the fixed selling and administrative expenses are
avoidable if product S85U is discontinued.
Required:
i. According to the company's accounting system, what is the net operating income earned
by product S85U? Show your work!
ii. What would be the effect on the company's overall net operating income of dropping
product S85U? Should the product be dropped? Show your work! (Points : 15)
4.(TCO D) Rosiek Corporation uses part A55 in one of its products. The company's
accounting department reports the following costs of producing the 4,000 units of the part
that are needed every year.
Per Unit
Direct Materials $2.80
Direct Labor $6.30
Variable Overhead $8.50
Supervisor's Salary $2.60
Depreciation of Special Equipment $6.80
Allocated General Overhead $6.10
An outside supplier has offered to make the part and sell it to the company for $32.30 each.
If this offer is accepted, the supervisor's salary and all of the variable costs, including direct
labor, can be avoided. The special equipment used to make the part was purchased many
years ago and has no salvage value or other use. The allocated general overhead represents
fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,000
of these allocated general overhead costs would be avoided. In addition, the space used to
produce part A55 could be used to make more of one of the company's other products,
generating an additional segment margin of $26,000 per year for that product.
Required:
i. Prepare a report that shows the effect on the company's total net operating income of
buying part A55 from the supplier rather than continuing to make it inside the company.
ii. Which alternative should the company choose? (Points : 15)
5.(TCO D) Manning Co. manufactures and sells trophies for winners of athletic and other events. Its
manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly
production is 15,300 trophies. The company normally charges $141 per trophy. Cost data for the
current level of production are shown below.
Variable Costs
Direct Materials $948,600
Direct Labor $290,700
Selling and Administrative $41,300
Fixed Costs
Manufacturing $579,870
Selling and Administrative $134,640
The company has just received a special one-time order for 900 trophies at $73 each. For this
particular order, no variable selling and administrative costs would be incurred. This order would
also have no effect on fixed costs.
Required:
Should the company accept this special order? W hy? (Points : 15)
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