114. A company must decide between scrapping or rebuilding units that do not pass inspection. The company has 15,000 such units that cost $6 per unit to manufacture. The units were built to satisfy a special order, which must still be satisfied if the defective units are scrapped. The units can be sold as scrap for $2.50 each or they can be reworked for $4.50 each and sold for the full price of $9 each. If the units are sold as scrap, the company will have to build 15,000 replacement units and sell them at the full price.
Required:
a. What is the net return from selling the units as scrap?
b. What is the net return from reworking and selling the units?
c. Should the company sell the units as scrap or rework them?
115. A company expects to produce and sell a single product. Management desires a 14% return on assets of $725,000. The following additional company information is available:
Variable costs (per unit)
|
|
Production costs
|
$58
|
Nonproduction costs
|
$11
|
Fixed costs (in total)
|
|
Overhead
|
$179,872
|
Nonproduction
|
$49,984
|
Required:
Compute selling price per unit given that markup percentage equals desired profit divided by total costs under the following assumptions.
a. The company produced and sold 17,600 units
b. The company produced and sold 28,732 units
116. A company expects to produce and sell a single product. Management desires a 13% return on assets of $2,100,000. The following additional company information is available:
Variable costs (per unit)
|
|
Production costs
|
$62
|
Nonproduction costs
|
$8
|
Fixed costs (in total)
|
|
Overhead
|
$521,280
|
Nonproduction
|
$397,824
|
Required:
Compute selling price per unit given that markup percentage equals desired profit divided by total costs under the following assumptions:
a. The company produced and sold 19,200 units
b. The company produced and sold 114,888 units