Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week. The car wash has two stations: an automatic washing and drying stationthat can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day. Based on a recent year-end review of operations, Kim estimates that futuredemand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows:QiKimshouldDayCarsshould notMon.160Tues.180Wed.150Thurs.140Fri.260By installing additional equipment (at a cost of $90,000) Kim can increase the capacity of the interior cleaning to 300 cars per day. Each car wash generates a pretaxcontribution of $5.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less?install the additional equipment because the payback period is years. (Enter your response rounded to two decimal places.)Sat.270Sun.250

Pretax contribution = $5.00 per carThe number of cars handled at interior cleaning station is…

Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week. The car wash has two stations: an automatic washing and drying station that can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day. Based on a recent year-end review of operations, Kim estimates that future demand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows: D Kim should Day Cars should not Mon. 160 Tues. 180 Wed. 150 Thurs. 140 Fri. 260 By installing additional equipment (at a cost of $90,000) Kim can increase the capacity of the interior cleaning to 300 cars per day. Each car wash generates a pretax contribution of $5.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less? install the additional equipment because the payback period is years. (Enter your response rounded to two decimal places.) Sat. 270 Sun. 250

Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week. The car wash has two stations: an automatic washing and drying station that can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day. Based on a recent year-end review of operations, Kim estimates that future demand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows: D Kim should Day Cars should not Mon. 160 Tues. 180 Wed. 150 Thurs. 140 Fri. 260 By installing additional equipment (at a cost of $90,000) Kim can increase the capacity of the interior cleaning to 300 cars per day. Each car wash generates a pretax contribution of $5.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less? install the additional equipment because the payback period is years. (Enter your response rounded to two decimal places.) Sat. 270 Sun. 250

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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Kim Epson operates a full-service car wash, which operates from 8 a.m. to 8 p.m., 7 days a week. The car wash has two stations: an automatic washing and drying station and a manual interior cleaning station. The automatic washing and drying station can handle 30 cars per hour. The interior cleaning station can handle 200 cars per day. Based on a recent yearend review of operations, Kim estimates that future demand for the interior cleaning station for the 7 days of the week, expressed in average number of cars per day, would be as follows: Day Mon. Tues. Wed. Thurs. Fri. Sat. Sun. Cars 160 180 150 140 280 300 250 By installing additional equipment (at a cost of $50,000), Kim can increase the capacity of the interior cleaning station to 300 cars per day. Each car wash generates a pretax contribution of $4.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less?
Kim Epson operates a full-service car wash, which operatesfrom 8 a.m. to 8 p.m., 7 days a week. The car wash has two sta-tions: an automatic washing and drying station and a manualinterior cleaning station. The automatic washing and dryingstation can handle 30 cars per hour. The interior cleaningstation can handle 200 cars per day. Based on a recent year-end review of operations, Kim estimates that future demandfor the interior cleaning station for the 7 days of the week, expressed in average number of cars per day, would be asfollows:Day Mon. Tues. Wed. Thurs. Fri. Sat. Sun.Cars 160 180 150 140 280 300 250By installing additional equipment (at a cost of $50,000), Kimcan increase the capacity of the interior cleaning station to300 cars per day. Each car wash generates a pretax contribu-tion of $4.00. Should Kim install the additional equipment ifshe expects a pretax payback period of three years or less?
Kim Epson operates a full-service car wash, which operates from 8AM to 8 PM seven days a week. The car wash has two stations an automatic washing and drying station that can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day Based on a recent year-end Neview of operations, Kim estimates that future demand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows Day Cars Kim Mon 160 Tues 180 Wed 150 Thurs 140 Fri 270 Sat 250 fly instaling additional equipment (at a cost of $30,000) Kim can increase the capacity of the interior cleaning to 300 cars per day Each car wash generates a protax contribution of $1.00 Should Kim install the additional equipment if she expects a pretax payback penod of three years or less? install the additional equipment because the payback period is Sun 250 years (Enter your response rounded to be decimal places)
The Barberton Municipal division of Road Maintenance is charged with road repair in the city of Barberton and the surrounding area. Cindy Kramer, road maintenance director, must submit a staffing plan for the next year based on a set schedule for repairs and on the city budget. Kramer estimates that the labor hours required for the next four quarters are 6,000, 12,000, 20,000, and 10,000, respectively. Each of the 11 workers on the workforce can contribute 500 hours per quarter. Payroll costs are $6,000 in wages per worker for regular time worked up to 500 hours, with an overtime pay rate of $17 for each overtime hour. Overtime is limited to 20 percent of the regular-time capacity in any quarter. Although unused overtime capacity has no cost, unused regular time is paid at $12 per hour. The cost of hiring a worker is $3,600, and the cost of laying off a worker is $1,400. Subcontracting is not permitted. (Hint: When calculating the number of workers, make sure to round up to…
Emmons Lawn Maintenance (ELM) provides lawn and garden care for residential properties. In the current year, ELM maintains 76 properties and earns an average of $5,200 annually for each property. The owner of ELM is planning for the coming year. New building in the area is expected to increase volume by 21 percent. In addition, the owner estimates that the number of homeowners that will want ELM's service will increase by 11 percent. ELM plans to increase the price of service by 13.0 percent to cover expected increased wage and equipment costs. Required: Estimate revenues for Emmons Lawn Maintenance for the coming year. Note: Enter your answer rounded to the nearest whole dollar.
Emmons Lawn Maintenance (ELM) provides lawn and garden care for residential properties. In the current year, ELM maintains 93 properties and earns an average of $8,600 annually for each property. The owner of ELM is planning for the coming year. New building in the area is expected to increase volume by 38 percent. In addition, the owner estimates that the number of homeowners that will want ELM's service will increase by 28 percent. ELM plans to increase the price of service by 21.5 percent to cover expected increased wage and equipment costs. Required: Estimate revenues for Emmons Lawn Maintenance for the coming year. Note: Enter your answer rounded to the nearest whole dollar. > Answer is complete but not entirely correct. 1,661,140 Revenues
The Candy Factory Company manufactures candy that is sold to food distributors. The company produces at full capacity for six months each year to meet peak demand during the "candy season" from Halloween through Valentine's Day. During the other six months of the year, the manufacturing facility operates at 75% of capacity. The Candy Factory Company provides the following data for the year: (Click the icon to view the data.) The Candy Factory Company receives an offer to produce 12000 cases of candy for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum selling price The Candy Factory Company should accept for the order? Explain why. The minimum selling price that Candy Factory Company should accept for the special order is the C In this situation, the are not relevant because they will be incurred whether the order is accepted or not. is appropriate in this situation. Data table Cases of candy produced and sold…
St. John's Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMC's Cath Lab. Each technician is paid a salary of $36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for $250,000. It is expected to last five years. The equipment's capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is $120 per test. The technician's report with the outside physician's note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends $50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during…
Boyne University offers an extensive continuing education program in many cities throughout the state. For the convenience of its faculty and administrative staff and to save costs, the university operates a motor pool. The motor pool's monthly planning budget is based on operating 15 vehicles; however, for the month of March the university purchased one additional vehicle. The motor pool furnishes gasoline, oil, and other supplies for its automobiles. A mechanic does routine maintenance and minor repairs. Major repairs are performed at a nearby commercial garage. The following cost control report shows actual operating costs for March of the current year compared to the planning budget for March. Boyne University Motor Pool Cost Control Report For the Month Ended March 31 (Over) March Planning Under Actual Budget Budget 51,000 Miles Autos Gasoline 13,260 Oil, minor repairs, 7,650 parts Outside repairs 935 750 Insurance 1,405 1,275 Salaries and benefits 8,610 8,610 Vehicle depreciation…
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of$25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk usesa PC and laser printer in processing orders. Time available on each PC system is sufficient toprocess 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to thesalaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchaseorders are processed). During the year, 25,350 orders were processed.Required:1. Classify the resources associated with purchasing as (1) flexible or (2) committed.2. Compute the total activity availability, and break this into activity usage and unused activity.3. Calculate the total cost of resources supplied (activity cost), and break this into the cost ofactivity used and the cost of unused activity.4. (a) Suppose that a large special order will cause an additional 500 purchase orders. Whatpurchasing costs are…
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to the salaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Forms, Postage and Supplies Which of the resources associated with purchasing can be classified as committed resources? PC system and clerks 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: fill in the blank 3 purchase orders Activity usage: fill in the blank…
Bramble & Carla Vista Fabricators produces commemorative bricks that organizations use for fundraising projects. Joseph Bramble, the company's vice president of marketing, has prepared the following sales forecast for the first six months of the coming year. The company plans to sell the bricks for $24 each. January February March April May June 25,000 28,000 32,000 34,000 26,000 35,000 Bramble & Hill Fabricators' marketing department has identified the following monthly expenses that will be needed to support the company's sales and administrative functions. Depreciation $14,000 Sales staff salaries $26,000 Advertising $2,400 Executive salaries $35,000 Miscellaneous $1,900 In addition to these monthly expenses, the company will pay a commission to its salespeople equal to 8% of the sales revenue from each brick sold. The company expects bad debt expense to be 2% of sales…