1)Pasquale, Inc. produces three types of products with the following information.
                                    Product A          Product B       Product C
Unit sales price             $    100             $ 200          $ 400
Unit variable cost                   60                   140             300
Unit contribution margin       40                   60             100
Machine time required             1                      2                4
(minutes per unit)
Monthly demand (units)    20,000                50,000          80,000
Assume the company has only 300,000 minutes of machine time available during the month but requires 440,000 minutes to meet the demand for all three products.
• How should the manager prioritize production of the three products?
• Compute the number of units produced for each product.
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The situation in this problem involved only one binding internal constraint , Write a memo to the CEO- Mr. Pasquale describing the process to identify the optimal mix of products.
2) Half-Pint, Inc. manufactures child-sized tables and chairs for pre-school classrooms. To meet its annual production needs, Half-Pint requires 6,000 feet of lumber. As the new cost accountant, you plan to reevaluate the firm’s ordering policy for raw material, and have gathered the following data:
Current order size 1,000 feet of lumber
Ordering cost per order $500
Carrying costs per foot of lumber for one year $50
Lead time 10 days
Work year 250 days
a. At Half-Pint’s current order size of 1,000 feet of lumber per order:
i. Ordering costs per year =
ii. Carrying costs per year =
iii. Total costs to order and carry inventory =
b. Determine the economic order quantity (EOQ) for Half-Pint.
EOQ =
c. If Half-Pint decided to order lumber at the economic order quantity:
i. Ordering costs per year =
ii. Carrying costs per year =
iii. Total costs to order and carry inventory =

d. How much would Half-Pint save annually if it changed from its current order size of 1,000 to the economic order quantity?
Annual savings =

e. Deliveries of lumber are sometimes delayed, so Half-Pint wants to keep an extra 100 feet of lumber on hand as safety stock. What should the new reorder point be?
Reorder point =
3) Maker-O-Dough, Inc. needs to make more money. The firm wants a 10% rate of return on all capital projects, and evaluates them on a pre-tax basis.
Project A requires a $450,000 investment. It has an expected life of six years with an annual cash flow of $90,000 received at the end of each year.
a. Payback period for the project =
b. Net present value (NPV) of the project =
c. Estimated internal rate of return (IRR) for this project =
d. Should Maker-O-Dough accept or reject this project?
e.Explain:
Project B also requires a $450,000 investment, but it has an expected life of 3 years, and has the following estimated future cash flows:
Year 1 $175,000
Year 2 250,000
Year 3 150,000
Salvage value -0-
f. Payback period for the project =
g. Net present value (NPV) of the project =
h. Estimated internal rate of return (IRR) for this project =
i. Should Maker-O-Dough accept or reject this project?
j.Explain:
4) Last year, Turn-M-Out, Inc. began operations. During the year, the firm produced 30,000 units, sold 28,000 units for $200 each, and incurred the following costs:
Fixed Costs Variable Costs/Unit
Manufacturing overhead $270,000 Direct materials $80
Administrative expenses 150,000 Direct labor 20
Selling expenses 120,000 Manufacturing overhead 3
Selling expenses 40
a. As the firm’s new cost accountant, your first job is to determine the manufacturing cost/unit under absorption costing
Manufacturing cost/unit (absorption costing) =
b. Prepare an income statement under absorption costing for the year.
(Tax rate = 30%)
c. Value of ending inventory under absorption costing =
d. Compute the manufacturing cost/unit under variable costing.
Manufacturing cost/unit (variable costing) =
e. Prepare an income statement for the year under variable costing.
(Tax rate = 30%)
f. Value of ending inventory under variable costing =
g. When you show this information to Paige Turner, the CEO of Turn-M-Out, she is confused by the differences between the net income and ending inventory under absorption costing and under variable costing. She likes the results better under absorption costing, and wonders why you bothered to prepare a variable costing income statement. Write a memo to her explaining why these differences occurred and how the variable costing income statement might be useful to the firm.

5) Last year, Chop-M-Up, Inc. implemented a new labor process and redesigned its product, hoping to increase input usage efficiency. At the end of this year, the CEO wants an assessment of the changes on the firm’s productivity based on the following data:
                              Last Year          This Year
Output                      20,000lbs.          24,000lbs.
Output sales price    $20per lb.          $20per lb.
Materials                   16,000lbs.          16,800lbs.
Materials purchases $6per lb.             $8 per lb.
Labor                         10,000DLH       9,600DLH
Labor cost                $10per DLH       $10per DLH
Power                      4,000KWH       6,000KWH
Power cost                $2Per KWH       $3Per KWH

a. Compute the partial operational measures for each input for last year and this year.
Partial productivity for materials:
Last year = This year =
Partial productivity for labor:
Last year = This year =
Partial productivity for power:
Last year = This year =
What can you conclude about productivity improvement?
b. Compute operating income for each year and calculate the total change in profits from last year to this year.
Total change in profit from last year to this year =
c. Calculate the profit-linked productivity measures for this year.
Materials
Labor
Power
What do these measures suggest about changes in the firm’s productivity under the new production system?
d. Calculate the price-recovery component.
Price recovery component =
What does this measure suggest about relationship between the change in productivity and firm profitability this year?
6) Do-R-Best had a reputation for poor quality. At the beginning of 2016, the firm initiated a quality improvement program. To help assess the impact of the quality improvement program, the firm collected the following data for 2015 and the next three years after the change:
                                             2015       2016       2017    2018
Customer complaints       $100,000 $85,000 $62,000 $51,000
Packaging inspections       2,000       3,000       5,000    5,000
Product Acceptance          12,000    10,000    9,000    7,000
Quality training                   1,000       2,000       5,000    8,000
Reliability engineering       8,000       10,000    15,000 25,000
Re-inspection                   75,000       65,000    48,000 29,000
Rework                            30,000       25,000    18,000 12,000
Warranty and Repair          70,000    50,000    40,000 25,000
a. Classify each cost as a Prevention Cost, Appraisal Cost, Internal Failure Cost, or External Failure Cost, and prepare a multiple-year report for the firm’s costs of quality.
b. Based on this trend report, what do you observe about changes in the firm’s quality costs over the 4-year period?
c. What recommendations would you make to the firm about its quality costs going forward?

1)Pasquale, Inc. produces three types of products with the followin...