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Jefferson Labs , a nonprofit organization , estimates that it can save $33 090 a year in cash operating costs for the next & years if it buys

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Jefferson Labs , a nonprofit organization , estimates that it can save $33 090 a year in cash operating costs
for the next & years if it buys a special-purpose eye – testing mach
testing machine at a cost
cost of $140 000 . No terminal disposal value is
expected . Jefferson Labs required rate of return is 12% . Assume all cash flows occur
at year – end except for initial investment amounts . Jefferson Labs uses straight line depreciation
resent Value of $1 table Present Value of Annuity of $1 table Future Value of ST table Future Value of Annuity of ST table
Read the requirements
Requirement 1 Calculate the following for the special – purpose eye – testing machine :
a . Net present value ( NPV ) ( Use factors to three decimal places X X X X and use a minus sign or parentheses for a negative net present value Enter the net present
I value of the investment rounded to the nearest whole dollar . )
The net present value is s
Calculate the following for the
for the special – purpose eye – testing machine
a . Net present value
b . Payback period
C . Internal rate of return
Accrual accounting rate of return based on net initial investment
Accrual accounting rate of return based on average investme
2 . What other factors should Jefferson
Labs consider in deciding whether to
purchase the special-purpose eye- testing machine ?

 
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Katharine Mcknight is the owner of Groovy Bikes , a company that produces high quality cross country bicycles , Groovy Bikes participa shops For

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Katharine Mcknight is the owner of Groovy Bikes , a company that produces high quality cross country bicycles , Groovy Bikes participa
shops For several years Groovy
Bikes has
purchased titanium from suppliers in the supply chain
Groovy Bikes uses titanium for the bicycle frames because it is stronger and lighter than other metals and in
las in a supply chain that consists of suppliers manufacturers distributors and alke bleycle shops For several years Grow
fare increases the quality of the bicycle Earlier this year Groovy Bikes h
red Michael Gammaro , a
asing manager
Michael believed that he could reduce costs it he
purchased titanium from an online marketplace at a lower price
( Click the icon to view the standard and actual information )
Read the requirements
@ Data Table
@ Requirements
Requirement 1 . Compute the direct materials price and efficiency vari
established the following standards based upon the
Let’s begin by calculating the cost for !
company experience with their previous suppliers . The standards are
1 . Compute the direct materials price and efficiency varian
for the actual input at the budgeted price .
company’s experien
as follows
at factors can explain the variances identified in requirement 1 ? Could
any other variances be affected ?
Actual input
Budgeted price
8 24 per pound
3 . Was switching suppliers a good idea for Groovy Bikes ? Explain why or why
Direct materials ( purchases )
Titanium used per bicycle
Direct materials ( usage )
Should Michael Gammaro’s performance evaluation be based solely on price
Actual results for the first month using the online supplier of titanium
Variances ? Should the production manager’s evaluation be based solely on
are as follows
shiciency variances ? Why is it important for Katharine Mcknight to
understand the causes of a variance before she evaluates performance ?
Bicycles produced
5 . Other than performance evaluation , what reasons are there for calculating
Thanum purchased
4 500 lb for $1 12.700

 
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Jumpin Fish Computer Co . outsources the production of motherboards for its co Due to differences in the product failure rates in the two companies

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Jumpin Fish Computer Co . outsources the
production of motherboards for its co
Due to differences in
the product failure rates in the two companies , 5% of
motherboards purchased from Alpha will be inspected and 25% of motherboards purcha
masters It is currently deciding which of two suppliers to use Alpha or Beta Due to diferences in the prod
sed from Beta will be inspected . The following data refers to costs ass
( Click the icon to view the data )
Requirements
@ Data Table
1 . What is the relevant cost of purchasing from Alpha and Beta ?
2 . What factors other than cost should Jumpin Fish consider ?
Alpha
Requirement 1 . What is the relevant cost of purchasing from Alpha and Beta ?
Number of orders per year
Calculate the relevant cost of purchasing from Alpha and Beta
otherboards
Annual motherboards demanded
17.000
17.000
Alpha
Price per motherboard
8 95
5 91
Purchase costs
Ordering cost per order
8 91
Ordering costs
Inspection cost per unit
Inspection costs
verage inventory level
200 units
200 units
equired annual return on investment
Expected number of stockouts
Stockout costs
Stockout cost ( cost of rush order ) per stockout
Return costs
Units returned by customers for replacing motherboards
ost of replacing each motherboard
8 21
5 21

 
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Using the MRF” system= what is the annual cost of producing and canying JPods in inventory

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TechWorks Corp. produces J-Pods, music players that can download thousands of songs. TechWorks forecasts that demand in 2014 will be 43,200 J-Pods. The variable production cost of each J-Pod is $52. In its MRP system, due
to the large $91,200 cost per setup, TechWorks plans to produce J-Pods once a month in batches of 3,600 each. The carrying cost of a unit in inventory is $19 per year.
Read the requirements
Requirement 1. Using the MRP system, what is the annual cost of producing and carrying J-Pods in inventory? (Assume that, on average, half of the units produced in a month are in inventory.)
Begin by determining the formula, then calculate the annual cost of producing and carrying J-Pods in inventory, using an MRP system.
Cost of producing
and carrying

1. Using the MRF“ system= what is the annual cost of producing and canying J—Pods in inventory“?
[Assume that, on average, half of the units produced in a month are in inventory.) A new manager at TechWorlcs has suggested that the company use the ECG model to determine
the optimal batch size to produce. [To use the EDQ model, TechWorks needs to treat the setup
cost in the same way it would treat ordering cost in a traditional EDD model.) Determine the
optimal batch size and number of batches. Round up the number of batches to the nearest whole
number. lii’ir’hat would be the annual cost of producing and canying .l—Pods in inventory if it uses the
optimal batch size? Compare this cost to the cost calculated in requirement 1. Comment briefly. Ted’IWorks is also considering switching from an MRP system to a JIT system. This will result in
producing J-Pods in batch sizes of Bill] J-Pods and will reduce obsolescence, improve quality, and
result in a higher selling price. The frequency of production batches will force TechWorks to reduce
setup time and will result in a reduction in setup cost. The new setup cost will be $2M] per setup.
What is the annual cost of producing and carrying J—Pods in inventory under the JIT system? Compare the models analyzed in the previous parts oi the problem. 1lr’lrl’hat are the advantages and
disadvantages of each?

 
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