SY Telc has recently started the manufacture of RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks

ACC 560 Week 5 Assignment

E7-6 SY Telc has recently started the manufacture of RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 20,000 RecRobo’s is as follows.

Cost
Direct materials ($40 per robot) $800,000
Direct labor ($30 per robot) 600,000
Variable overhead ($6 per robot) 120,000
Direct labor ($30 per robot) 600,000
Variable overhead($6 per robot) 120,000
Allocated fixed overhead($25 per robot) 500,000
Total $2,020,000
SY Telc is approached by Chen Inc. which offers to make RecRobo for $90 per unit or $1,800,000.

Instructions
(a) Using incremental analysis, determine whether SY Telc should accept this offer under each of the following independent assumptions.
(1) Assume that $300,000 of the fixed overhead cost can be reduced (avoided).
(2) Assume that none of the fixed overhead can be reduced (avoided). However, if the robots are purchased from Chen Inc., SY Telc can use the released productive resources to generate additional income of $300,000.
(b) Describe the qualitative factors that might affect the decision to purchase the robots from an outside supplier.

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Charlie's Pets succeeded so well that Charlie decided to manufacture his own brand of chewing bone—Fido Treats

P16-25A Charlie's Pets succeeded so well that Charlie decided to manufacture his own brand of chewing bone—Fido Treats. At the end of December 2012, his accounting records showed the following:

Inventories: Beginning Ending
Materials $ 13,400 $ 9,500
Work in process 0 2,000
Finished goods 0 5,300

Other information:
Direct material purchases $ 33,000 Utilities for plant $ 1,600
Plant janitorial services 800 Rent of plant 13,000
Sales salaries expense 5,000 Customer service hotline expense 1,400
Delivery expense 1,700 Direct labor 22,000
Sales revenue 109,000

Requirements
1.Prepare a schedule of cost of goods manufactured for Fido Treats for the year ended December 31, 2012.
2.Prepare an income statement for Fido Treats for the year ended December 31, 2012.
3.How does the format of the income statement for Fido Treats differ from the income statement of a merchandiser?
4.Fido Treats manufactured 18,075 units of its product in 2012. Compute the company's unit product cost for the year.


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At the beginning of 2009, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods

Ethics Case 11-10; Asset impairment

At the beginning of 2009, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a 10-year service life and no residual value. The straight-line depreciation method was used to measure depreciation for 2009 and 2010.

Late in 2011, it became apparent that sales of the new frozen food line were significantly below expectations. The company decided to continue production for two more years (2012 and 2013) and then discontinue the line. At that time, the equipment will be sold for minimal scrap values.

The controller, Heather Meyer, was asked by Harvey Dent, the company's chief executive officer (CEO), to determine the appropriate treatment of the change in service life of the equipment. Heather determined that there has been impairment of valued requiring an immediate write-down of the equipment of $12,900,000. The remaining book value would then be depreciate over the equipment's revised service life.

The CEO does not like Heather's conclusion because of the effect it would have on 2011 income. "Looks like a simple revision in service life from 10 years to 5 years." Dent concluded. "let's go with it that way, Heather."

Required:
1. What is the difference in before-tax income between the CEO's and Heather's treatment of the situation?
2. Discuss Heather Meyer's ethical dilemma.

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Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage

Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage. The new equipment would cost $1,728,125, with an estimated five-year life and no salvage value. The estimated annual operating results with the new equipment are as follows:

Revenue from Sales of New Luggage $800,000

Expenses Other Than Depreciation $306,250

Depreciation (Straight-Line Basis) 345,625 651,875

Increase in Net Income from the New Line 148,125

All revenue from the new luggage line and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes. You are to compute the following for the investment in the new equipment to produce the new luggage line:

a. Annual cash flows.

b. Payback period.

c. Return on average investment.

d. Total present value of the expected future annual cash inflows, discounted at an annual rate of 10 percent.

e. Net present value of the proposed investment discounted at 10 percent.

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