Question 1: Problem 1. Geppetto’s Workshop is a toy manufacturing firm. It makes all different kinds of wooden toys, which are sold to retailers all over Canada. One of the most popular toys is a wooden puzzle with all the letters of the alphabet. The puzzle generally sells for $300. The standard cost card for the puzzle follows: DM (2.1 board feet of wood @ $25 per linear foot) $52.50 DL (.25 hour @ $25/hour) 6.25 VOH (3 MH @ 1.5/hour) 4.50 FOH (3 MH @ 25.50/hour) 76.50 TOTAL COST $139.75 Due to the world-wide economic slowdown, Geppetto’s has not been producing at its normal full capacity, which is 450,000 MH. For the upcoming month, the budget will be based on an expected 325,000 MH. A potential customer from Bribane has approached Geppetto’s about buying 40,000 puzzles. The customer would require that some elements of the puzzle be modified in order to better appeal to its target market. Most of the design changes would not entail increased costs. However, the client wants one modification that would require DL time to be doubled. The client is offering to pay $100 per puzzle if the puzzles can be delivered by the end of the upcoming month. Compute the impact on net income of accepting the offer.
Question 1:
Problem 1. Geppetto’s Workshop is a toy manufacturing firm. It makes all different kinds of wooden toys, which are sold to retailers all over Canada. One of the most popular toys is a wooden puzzle with all the letters of the alphabet. The puzzle generally sells for $300. The
DM (2.1 board feet of wood @ $25 per linear foot) $52.50
DL (.25 hour @ $25/hour) 6.25
VOH (3 MH @ 1.5/hour) 4.50
FOH (3 MH @ 25.50/hour) 76.50
TOTAL COST $139.75
Due to the world-wide economic slowdown, Geppetto’s has not been producing at its normal full capacity, which is 450,000 MH. For the upcoming month, the budget will be based on an expected 325,000 MH.
A potential customer from Bribane has approached Geppetto’s about buying 40,000 puzzles. The customer would require that some elements of the puzzle be modified in order to better appeal to its target market. Most of the design changes would not entail increased costs. However, the client wants one modification that would require DL time to be doubled. The client is offering to pay $100 per puzzle if the puzzles can be delivered by the end of the upcoming month.
Compute the impact on net income of accepting the offer.
Problem 3. Time to Live By makes custom made sundials. Two months ago, the Thane of Sapphire Fief ordered a sundial to commemorate the birth of her 10th child. The sundial, as ordered, was made of a rare granite mined near Banff. Huge sapphires shaped like fanciful griffins adorned the rim and the numerals are made of diamonds and rubies. The center was made of purest gold. Due to some political unrest, the Thane and her family are now in hiding. It is not expected that she will ever be able to take possession of (or pay for) the sundial. The cost of the sundial was:
DM $200,000
DL 30,000
VOH 5,000
FOH 15,000
Time to Live By has estimated that only 25% of the value of the gems and other material from the sundial can be recovered, since they were cut into such unusual shapes.
The firm plans to offer the sundial at an auction next week. The cost to transport the sundial to the auction is $150. The auction house takes a 2% cut of the selling price.
What is the lowest price Time to Live should accept for the sundial?
So I solved both questions but I would like you to pretend the solution is incorrect and make an argument for it being wrong and recommend an alternative. i attached both solutions as an image thank you
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