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1. Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors-home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Home Meals On House- Total Nursing Wheels keeping Revenues $933,000 $270,000 $ 406,000 $ 257,000 Variable expenses 463,000 117,000 195,000 151,000 Contribution margin 470,000 153,000 211,000 106,000 Fixed expenses: Depreciation 69,500 8,400 40,200 20,900 Liability insurance 43,300 20,200 7,300 15,800 Program administrators' salaries 114,300 40,400 38,300 35,600 General administrative overhead* 186,600 54,000 81,200 51,400 Total fixed expenses 413,700 123,000 167,000 123,700 Net operating income (loss) $ 56,300 $ 30,000 $ 44,000 $ (17,700) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization's finances and considers the net operating income of $56,300 last year to be too small. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) Therefore, she has asked for more information about the financial advisability of discontinuing the housekeeping program. The depreciation in housekeeping is for a van that transports housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. Depreciation charges assume zero salvage value. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided. Required: 1a. What is the impact on net operating income by discontinuing housekeeping program? (Input the amount as a positive value.) (Click to select) : in net operating income by $ 1b. Should the housekeeping program be discontinued? Yes No 2. Would a segmented income statement format be more useful to management in assessing the long- run financial viability of the various services. Yes No 2. Climate-Control, Inc., manufactures a variety of heating and air-conditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a thermostat to Climate-Control for $43 per unit. To evaluate this offer, Climate-Control, Inc., has gathered the following information relating to its own cost of producing the thermostat internally: 15,500 Per Unit Units per year Direct materials $ 13 $ 201,500 Direct labor 15 232,500 Variable manufacturing overhead 3 46,500 Fixed manufacturing overhead, traceable 5* 77,500 Fixed manufacturing overhead, common, but 17 allocated 263,500 Total cost $ 53 $ 821,500 *40% supervisory salaries; 60% depreciation of special equipment (no resale value). Required: 1a. Assuming that the company has no alternative use for the facilities now being used to produce the thermostat, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to nearest dollar amount.) Make Buy Total relevant cost (15,500 $ $ units) 1b. Should the outside supplier's offer be accepted? Reject Accept 2a. Suppose that if the thermostats were purchased, Climate-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $169,000 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to nearest dollar amount.) Make Buy Total relevant cost (15,500 $ $ units) 2b. Should Climate-Control, Inc., accept the offer to buy the thermostats from the outside supplier for $43 each? Reject Accept 3. Miyamoto Jewelers is considering a special order for 21 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $405 and its unit product cost is $256 as shown below: Direct materials $ 143 Direct labor 80 Manufacturing overhead 33 Unit product cost $ 256 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $10 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing $9 per bracelet and would also require acquisition of a special tool costing $462 that would have no other use once the special order is completed. This order would have no effect on the company's regular sales and the order could be fulfilled using the company's existing capacity without affecting any other order. Required: a. What effect would accepting this order have on the company's net operating income if a special price of $365 is offered per bracelet for this order? (Input the amount as a positive value.) Net operating income (Click to select) $ by $ b. Should the special order be accepted at this price? No Yes 4. Sport Luggage Inc. makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular models appear below. Ski Golf Fishing Vault Caddy Quiver Selling price per unit $220 $380 $225 Variable cost per unit $100 $110 $115 Plastic injection molding machine processing time required to produce one unit 5 minutes 9 minutes 8 minutes Pounds of plastic pellets per unit 14 pounds 8 pounds 6 pounds Required: 1a. The total time available on the plastic injection molding machine is the constraint in the production process. What is contribution margin per unit of the constrained resources for Ski Vault, Golf Caddy and Fishing Quiver? (Round your answers to 2 decimal places.) Ski Vault Golf Caddy Fishing Quiver Contribution margin $ per minute $ per minute $ per minute 1b. Which product would be the most profitable use of this constraint? Golf Caddy Fishing Quiver Ski Vault 1c. Which product would be the least profitable use of this constraint? Golf Caddy Fishing Quiver Ski Vault 2a. A severe shortage of plastic pellets has required the company to cut back its production so much that the plastic injection molding machine is no longer the bottleneck. Instead, the constraint is the total available pounds of plastic pellets. What is contribution margin per unit of the constrained resources for Ski Vault, Golf Caddy and Fishing Quiver? (Round your answers to 2 decimal places.) Ski Vault Golf Caddy Fishing Quiver Contribution margin $ per pound $ per pound $ per pound 2b. Which product would be the most profitable use of this constraint? Golf Caddy Ski Vault Fishing Quiver 2c. Which product would be the least profitable use of this constraint? Golf Caddy Ski Vault Fishing Quiver 5. Renfree Mines, Inc., owns the mining rights to a large tract of land in a mountainous area. The tract contains a mineral deposit that the company believes might be commercially attractive to mine and sell. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of equipment required $ 890,000 Annual net cash receipts $ 240,000* Working capital required $ 140,000 Cost of road repairs in ten years $ 56,000 Salvage value of equipment in eleven years $ 190,000 *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after eleven years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 19% (Ignore income taxes.) Click here to view Exhibit 11B-1 and Exhibit 11B-2. to determine the appropriate discount factor(s) using tables. Required: a. Determine the net present value of the proposed mining project. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, other intermediate calculations and final answer to the nearest whole dollar.) Net present value $ b. Should the project be accepted? No Yes

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