Assignment Is Due By 04/17/2018 At 5 Pm Este4 24 Sell Or Pro

Assignment Is Due By 04172018 At 5pm Este4 24 Sell Or Process Fur

ASSIGNMENT IS DUE BY 04/17/2018 at 5pm EST. E4-24. Sell or Process Further Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $12 per liter. It costs $100 to convert 100 liters of D into 60 liters of E and 40 liters of F. Product F can be sold immediately for $12 per liter or processed further into Product G at an additional cost of $10 per liter. Product G can then be sold for $26 per liter. Determine whether Product F should be sold or processed further into Product G.

Limited Resources Assume Fender produces only three guitars: the Stratocaster, Dreadnought, and Telecaster. A limitation of 720 labor hours per week prevents Fender from meeting the sales demand for these products. Product information is provided in an attached chart. Required: a. Determine the weekly contribution from each product when total labor hours are allocated to the product with the highest 1. unit selling price, 2. unit contribution margin, 3. contribution per labor hour (each situation is independent). b. What generalization can be made regarding resource allocation to achieve short-run profit maximization? c. Determine the opportunity cost if management requires weekly production of 20 Telecasters. d. Discuss reasons why resources may not always be allocated in the most economical way.

For E4-26, a key point is to find the contribution margin per hour for each product to answer the questions related to constrained resources (hours). This helps in optimal resource allocation to maximize profit.

Maria Pajet, a sales representative for UniTec Systems Inc., works about 80 hours weekly and serves 123 customers monthly. She plans to reduce her hours to 160 per month, which requires prioritizing her customer calls. Information provided in an attached chart helps determine the optimal customer call plan for maximum sales commissions. Required: a. Develop a monthly plan indicating the number of customers in each classification to maximize commissions. b. Calculate the total commissions earned under this plan. c. Explain reasons why she might not strictly follow the optimal plan.

Highlands Industries budget for February includes various costs. Using activity-based costing (ABC), prepare a manufacturing cost budget, distinguishing unit, batch, and facility-level costs. Discuss why Highland should continue with budgeting despite concerns over its time consumption and attention diversion.

Partial cash budgets for Holiday Events are provided for October to December, with details on loans to maintain a minimum balance and interest calculations. Complete the short-term financing section of the cash budget for these months.

MTC Wholesalers’ June 30 cash position is $175,000 with accounts payable of $99,000. Sales and purchase projections from July to October are in an attached chart, with specific collection and payment patterns. Prepare detailed purchases and cash budgets for July, August, and September, considering credit collection patterns and inventory costs.

Paper For Above instruction

The decision to sell or process further products, especially in manufacturing and supply chain management, is a fundamental aspect of managerial accounting that impacts profitability and operational efficiency. This paper explores the various decision-making scenarios presented in multiple exercises, focusing on profitability analysis, resource allocation, constrained optimization, and budgeting within different business contexts.

Selling or Processing Decision: A Cost-Analysis Approach

The first scenario involves Port Allen Chemical Company, which must decide whether to sell its joint product F immediately or process it further into G. At the core of this decision lies the analysis of incremental costs and revenues. Raw material D costs $12 per liter, and processing 100 liters costs $100, yielding 60 liters of E and 40 liters of F. F can either be sold at $12 per liter or processed into G, which sells at $26 per liter after an additional $10 per liter processing cost. The key is to compare the additional revenue from further processing against the additional cost.

Calculations show that processing F into G yields a contribution of $6 per liter ($26 sale price minus $10 processing cost), whereas selling F immediately provides $12 per liter. Therefore, unless G’s higher sale price compensates for other strategic considerations, it might be more profitable to sell F directly. This aligns with the principle of pursuing the option with the higher contribution margin unless market conditions or strategic factors favor further processing (Horngren et al., 2014).

Next, the resource allocation case involving Fender guitars highlights another decision-making process: how to prioritize production when limited by labor hours. The critical metric here is the contribution per labor hour, which guides the optimal use of scarce capacity. Calculating contribution per hour for each product enables managers to focus on the most profitable products per unit of resource used, ultimately maximizing short-term profits (Hilton & Platt, 2013).

The analysis reveals that allocating hours to the product with the highest contribution per hour leads to better utilization of limited resources. However, external factors such as market demand, strategic product mix, and customer preferences may influence actual allocation, underscoring that resource optimization sometimes must be balanced against other considerations (Anthony & Govindarajan, 2014).

Opportunity Cost and Resource Allocation

The opportunity cost of producing 20 Telecasters illustrates the trade-offs involved in constrained resource scenarios. The opportunity cost is measured in foregone contribution from other products that could have been produced with the same labor hours, emphasizing the importance of understanding the marginal benefit of each product (Drury, 2013).

Furthermore, in practical settings, companies may not always achieve optimal resource allocation due to factors like managerial heuristics, inaccurate data, or organizational inertia. These deviations from the theoretically optimal solution demonstrate the complexity of real-world decision-making (Kaplan & Atkinson, 2015).

Resource Allocation in Budgeting and Cost Management

The exercises regarding ABC costing and budgeting underscore the relevance of accurate cost allocation for effective management. ABC assigns costs based on activities, providing a more precise view of product and process costs than traditional costing methods, aiding managers in identifying cost drivers and areas for efficiency (Cooper & Kaplan, 1991).

Despite concerns that detailed budgeting consumes significant time and effort, its benefits—such as improved planning, control, and decision-making—are well documented. Budgeting facilitates proactive management, helps coordinate efforts across departments, and informs strategic adjustments (Anthony & Govindarajan, 2014).

Cash Budgeting and Short-term Financing

The cash budgets for Holiday Events and MTC Wholesalers exemplify the importance of liquidity management. Maintaining minimum cash balances, planning for short-term loans, and accounting for interest charges are critical to avoiding insolvency and ensuring operational continuity. Proper cash budgeting enables firms to manage timing differences between cash inflows and outflows, minimizing unnecessary borrowing costs (Brigham & Ehrhardt, 2016).

In conclusion, the exercises collectively illustrate that managerial decisions—whether regarding product processing, resource prioritization, cost management, or cash flow planning—rely on accurate analysis of incremental costs and benefits, recognition of constraints, and strategic considerations. Effective management requires a balance between quantitative analysis and qualitative judgment, especially when real-world complexities challenge purely optimal solutions.

References

• Anthony, R. N., & Govindarajan, V. (2014). Management Control Systems. McGraw-Hill Education.
• Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.
• Cooper, R., & Kaplan, R. S. (1991). Profit Priorities from Activity-Based Costing. Harvard Business Review.
• Drury, C. (2013). Management and Cost Accounting. Cengage Learning.
• Hilton, R. W., & Platt, D. (2013). Managerial Accounting: Creating Value in a Dynamic Business Environment. McGraw-Hill.
• Horngren, C. T., Datar, S. M., & Rajan, M. V. (2014). Cost Accounting: A Managerial Emphasis. Pearson.
• Kaplan, R. S., & Atkinson, A. A. (2015). Advanced Management Accounting. Pearson.