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The Minnetonka Corporation, which produces and sells to wholesalers a highly successful line of water skis, has decided to diversify to stabilize sales throughout the year. The company is considering the production of cross-country skis.
After considerable research, a cross-country ski line has been developed. Because of the conservative nature of the company management, however, Minnetonka’s president has decided to introduce only one type of the new skis for this coming winter. If the product is a success, further expansion in future years will be initiated.
The ski selected is a mass-market ski with a special binding. It will be sold to wholesalers for $80 per pair. Because of availability capacity, no additional fixed charges will be incurred to produce the skis. A $100,000 fixed charge will be absorbed by the skis, however, to allocate a fair share of the company’s present fixed costs to the new product.
Using the estimated sales and production of 10,000 pair of skis as the expected volume, the accounting department has developed the following cost per pair of skis and bindings:
Direct Labor: $35
Direct Material: $30
Total Overhead: $15
Total: $80
Minnetonka has approached a subcontractor to discuss the possibility of purchasing the bindings. The purchase price of the bindings from the subcontractor would be $5.25 per binding, or $10.50 per pair. If the Minnetonka Corporation accepts the purchase proposal, it is predicted that direct-labor and variable-overhead costs would be reduced by 10% and direct-material costs would be reduced by 20%.
1. Should the Minnetonka Corporation make or buy the bindings? Show calculations to support your answer.
2. What would be the maximum purchase price acceptable to the Minnetonka Corporation for the bindings? Support your answer with an appropriate explanation.
3. Instead of sales of 10,000 pair of skis, revised estimates show sales volume at 12,500 pair. At this new volume, additional equipment, at an annual rental of $10,000 must be acquired to manufacture the bindings. This incremental cost would be the only additional fixed cost required even if sales increased to 30,000 pair. (This 30,000 level is the goal for the third year of production.) Under these circumstances, should the Minnetonka Corporation make or buy the bindings? Show calculations to support your answer.
4. What qualitative factors (i.e. issues with vendors, customers, or within the product itself) should the Minnetonka Corporation consider in determining whether they should make or buy the binding

Seen 1 years ago Wilson Anderson 0 answers

Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinicparticipants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometricpressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watchesavailable for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2013. All watches aresold for $309 each.

Jul. 17 Purchased 57 watches for $8,037 ($141 per watch) on account.
Jul. 31 Sold 44 watches for $13,596 cash.
Aug. 12 Purchased 43 watches for $6,708 ($156 per watch) cash.
Aug. 22 Sold 22 watches for $6,798 on account.
Sep. 19 Paid for watches ordered on July 17.
Sep 27 Received full payment for watches sold on account on August 22.
Oct. 27 Purchased 81 watches for $13,770 ($170 per watch) cash.
Nov. 20 Sold 105 watches for $32,445 cash.
Dec. 4 Purchased 104 watches for $18,096 ($174 per watch) cash.
Dec. 8 Sold 32 watches for $9,888 on account.




Required:
a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2013, assuming Suzie uses FIFO to account for inventory. (Omit the "$" sign inyour response.)


Sales revenue $
Cost of goods sold $
Ending inventory $

b. Prepare the gross profit section of a partial income statement for transactions related to MU watches. (Amounts to be deducted should be indicated with minus sign.Omit the "$" sign in your response.)

GREAT ADVENTURES, INC.
Partial Income Statement
For the year ended December 31, 2013
$


$








2. Late in December, the next generation of multiuse (MU II) watches is released. In addition to all of the features of the MU watch, the MU II watches are equippedwith a global positioning system (GPS) and have the ability to download and play songs and videos off the internet. The demand for the original MU watches is greatlyreduced. As of December 31, the estimated market value of MU watches is only $111 per watch.

a. Record any necessary entry on December 31, 2013, related to this information. (Omit the "$" sign in your response.)

Date General Journal Debit Credit
Dec 31


b. For what amount would MU inventory be reported in the December 31, 2013, balance sheet? (Omit the "$" sign in your response.)

MU Inventory $

c. Prepare an updated gross profit section of a partial income statement accounting for this additional information. (Amounts to be deducted should be indicated withminus sign. Omit the "$" sign in your response.)

GREAT ADVENTURES, INC.
Partial Income Statement
For the year ended December 31, 2013
$


$



Seen 1 years ago Wilson Anderson 0 answers

Select any actions that increase the cash account. Select all that apply: (Points : 3)
payment is received on a receivable
An interest payment on a notes payable is made
A payment due is received from a client
An old machine is sold for cash

2. (TCO 2) Which one of the following will decrease the operating cycle? (Points : 3)
increasing the days' sales in inventory
decreasing the accounts payable period
decreasing the cash cycle
increasing the accounts receivable turnover rate
decreasing the accounts payable turnover rate

3. (TCO 2) Assume Green Leaf Nursery anticipated sales of $500 in this quarter. Accounts receivable at the beginning of the quarter was $300. Assuming a collectionperiod of 30 days, which is the approximate cash collections amount for the quarter? (Points : 3)
$550
$630
$250
$170
None of the above

4. (TCO 2) Which one of the following practices will reduce a firm's collection float? (Points : 3)
utilizing zero-balance accounts
depositing checks weekly rather than daily
requiring all customers pay by check rather than with cash
installing a lockbox system
paying all bills five days sooner

5. (TCO 2) Which of the following statements is true? Select all that apply: (Points : 3)
The optimal credit policy minimizes the total cost of granting credit.
Firms should avoid offering credit at all cost.
An increase in a firm's average collection period generally indicates that an increased number of customers are taking advantage of the cash discount.
The costs of the credit application process and the costs expended in the collection process are carrying costs of granting credit.
Capacity refers to the ability of a firm to meet its credit obligations out its operating cash flows.
The optimal credit policy is the policy that produces the largest amount of sales for a firm.

6. (TCO 2) You place an order for 100 units of inventory Part A at a unit price of $522. The supplier offers terms of 3/25, net 40. How much should you remit if youtake the discount? (Points : 3)
$52,200
$50,634
$51,678
None of the above

7. (TCO 2) Auto Parts sells 1,200 electric parts per week and then reorders another 1,200 parts. If the relevant carrying cost per electric part is $4 and the fixedorder cost is $750, what is the total carrying cost and the restocking cost, respectively? (Points : 3)
$2,400 and $39,900
$3,200 and $33,800
$2,400 and $39,000
$3,400 and $30,000
None of the above

8. (TCO 2) Company ABC has expected sales of 12,000 units this year, an ordering cost of $6 per order and carrying costs of $1.60 per unit. What is the EOQ? (Points :3)
310 units
300 units
150 units
155 units
None of the above

9. (TCO 2) The _________ is the time it takes to acquire and sell inventory. (Points : 3)
cash cycle
operating cycle
inventory period

accounts receivable period
accounts payable period

10. (TCO 2) List three examples of short-term investments. (Points : 3)






Seen 1 years ago Smith Jones 2 answers

1. What are network effects? What are the other names for this concept?

2. List several products or services subject to network effects. What factors do you believe helped each of these efforts achieve dominance?

3. Which firm do you suspect has stronger end-user network effects: Google’s online search tool or Microsoft’s Windows operating system? Why?

4. Network effects are often associated with technology, but tech isn’t a prerequisite for the existence of network effects. Name a product, service, or phenomenonthat is not related to information technology that still dominates due to network effects.


5. What are the factors that contribute to the value created by network effects?

6. Why is staying power particularly important to many technology products and services?

7. Think about the kinds of technology products that you own that are subject to network effects. What sorts of exchange do these products leverage (e.g., information,money, software, or other media)?

8. Think about the kinds of technology projects you own. What sorts of switching costs are inherent in each of these? Are these strong switching costs or weakswitching costs? What would it take for you to leave one of these services and use a rival? How might a competitor try to lessen these switching costs to persuade youto adopt their product?

9. Which other terms are sometimes used to describe the phenomenon of switching costs?

10. Think about the kinds of technology products that you own that are subject to network effects. What sorts of complementary benefits are available for theseproducts? Are complementary benefits strong or weak (meaning, do people choose the product primarily based on these benefits, or for some other reason)?

11. Identify firms that you believe have built a strong platform. Can you think of firms that have tried to develop a platform, but have been less successful? Why doyou suppose they have struggled?

Seen 1 years ago Roy Taylor 0 answers

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