Posted: October 25th, 2021

Outdoors Furniture, Inc. annually produces and sells 100,000 Umbrellas (units)

Question
1 (25 points)
.gif" alt="Question 1 unsaved">
Outdoors Furniture, Inc. annually produces and sells 100,000
Umbrellas (units), incurring the following results:Sales$59 per unitMaterials$3.80 per unitLabor$2.20 per unitOverhead$1.50 per unitSelling Expenses$1.40 per unitAdministrative Expenses$ .80 per unit
A new customer has offered to
purchase an additional 10,000 Umbrellas, at $38.50 each.
If Outdoors Furniture, Inc. decided
to produce the additional 10,000 units:
a.
Additional materials at
$5.50 per unit and additional labor at $2.20 per unit would be incurred
b.
Overhead costs would
increase by $5,825
c.Selling
expenses would increase by $2,200
d.
Administrative expenses
would increase by $1,075
Plant capacity is not a concern for Outdoors Furniture, Inc.
It has the excess capacity to produce the additional units. Ignore income
taxes.
Should Outdoors Furniture, Inc. accept OR reject this order?
Show all work.Question
2 (25 points)
.gif" alt="Question 2 unsaved">Service
Departments:Costs IncurredHuman Resources$ 83,00040 sq. ft3 employeesEngineering$225,00020 new hires16 employeesQuality Assurance$ 95,0006 new hires85 sq. ft.Production Departments:Cutting$ 12,00015 new hires21 sq. ft.22 employeesDrilling$ 6,0005 new hires16 sq. ft8 employeesAssembly$ 26,0008 new hires42 sq. ft.35 employeesHuman Resource costs are allocated
based on new hires; Engineering costs are allocated based on square footage;
Quality Assurance costs are allocated based on number of employeesRank the service departments based on the percentage of
their services provided to the production departments. Use this ranking to
allocate the support departments’ costs to the operating departments based on
the step-down method. Show all allocations and totals to each department.Question
3 (25 points)
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Building, Inc. is contemplating
purchasing additional warehouse space, at a cost of $15,000.
If the purchase is made, Building,
Inc. can improve its production and expects profits to increase by $15,200.
Building, Inc. has Assets of
$100,000. Currently, Building, Inc. has a ROI of 25% and a Required Rate of
Return of 15%.
Building, Inc. evaluates itself based on Return on
Investment (ROI), and will use the ROI calculation to make a decision. Should
Building, Inc. purchase the additional warehouse space? Why Or Why not? Show
your work.Question
4 (25 points)
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Assets
$ 200,500
Liabilities
65,000
Operating
Income
650,000XYZ
Manufacturer has a required rate of return of 18 percent. The Portfolio Manager
of XYZ’s Investment Division has presented an investment opportunity which is
expected to yield 23%. The investment will cost $22,000.Compute
the following Residual Income calculations:
(a)
XYZ’s Residual Income before the new investment
(b)
Residual Income from the new investment
(c)
XYZ’s Residual Income after the new
investment
(d) If XYZ evaluates whether
to accept a proposed investment based on Residual Income, should the company
accept its Portfolio Manager’s proposal to make this investment?

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