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Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019). Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made Variable manufacturing costs Direct material cost per EC Direct manufacturing labor cost per EC Variable manufacturing cost per batch for setups, Materials handling, and quality control 360,000 850,000 $200 60 2,000 360,000 850,000 $ 190 55 1,800 Cari Pump manufactured 9,000 ECs in 2019 in 30 batches of 300 each. In 2020, Cari Pump anticipates needing 10,500 ECs. The ECs would be produced in 60 batches of 175 each. A supplier, Furry Deals has enquired about supplying ECs to Cari Pump in 2020 at $350 per EC on whatever delivery schedule Cari Pump wants. 1. There are both quantitative and qualitative factors for decision making by management. How does the consideration of qualitative factors improve decisions made by managers? 2. What is an opportunity cost and why should it be included when making decisions? 3. What are some of the key factors that influence group interaction in a decision- making environment in business?

Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019). Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made Variable manufacturing costs Direct material cost per EC Direct manufacturing labor cost per EC Variable manufacturing cost per batch for setups, Materials handling, and quality control 360,000 850,000 $200 60 2,000 360,000 850,000 $ 190 55 1,800 Cari Pump manufactured 9,000 ECs in 2019 in 30 batches of 300 each. In 2020, Cari Pump anticipates needing 10,500 ECs. The ECs would be produced in 60 batches of 175 each. A supplier, Furry Deals has enquired about supplying ECs to Cari Pump in 2020 at $350 per EC on whatever delivery schedule Cari Pump wants. 1. There are both quantitative and qualitative factors for decision making by management. How does the consideration of qualitative factors improve decisions made by managers? 2. What is an opportunity cost and why should it be included when making decisions? 3. What are some of the key factors that influence group interaction in a decision- making environment in business?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...
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Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019) Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made Variable manufacturing costs Direct material cost per EC Direct manufacturing labor cost per EC Variable manufacturing cost per batch for setups, Materials handling, and quality control 360,000 850,000 $ 200 60 2,000 360,000 850,000 $ 190 55 1,800 Cari Pump manufactured 9,000 ECs in 2019 in 30 batches of 300 each. In 2020, Cari Pump anticipates needing 10,500 ECs. The ECs would be produced in 60 batches of 175 each. A supplier, Furry Deals has enquired about supplying ECs to Cari Pump in 2020 at $350 per EC on whatever delivery schedule Cari Pump wants. 1. There are both quantitative and qualitative factors for decision making by management. How does the consideration of qualitative factors improve decisions made by managers? 2. What is an opportunity cost and why should it be included when making decisions? 3. What are some of the key factors that influence group interaction in a decision- making environment in business?
Transcribed Image Text:Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019) Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made Variable manufacturing costs Direct material cost per EC Direct manufacturing labor cost per EC Variable manufacturing cost per batch for setups, Materials handling, and quality control 360,000 850,000 $ 200 60 2,000 360,000 850,000 $ 190 55 1,800 Cari Pump manufactured 9,000 ECs in 2019 in 30 batches of 300 each. In 2020, Cari Pump anticipates needing 10,500 ECs. The ECs would be produced in 60 batches of 175 each. A supplier, Furry Deals has enquired about supplying ECs to Cari Pump in 2020 at $350 per EC on whatever delivery schedule Cari Pump wants. 1. There are both quantitative and qualitative factors for decision making by management. How does the consideration of qualitative factors improve decisions made by managers? 2. What is an opportunity cost and why should it be included when making decisions? 3. What are some of the key factors that influence group interaction in a decision- making environment in business?
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