The Lexington Company produces gas grills. This year’s expected production is 20,000 units. Currently, Lexington makes the side burners for its grills. Each grill includes two side burners. Lexington’s management accountant reports the following costs for making the 40,000 burners: Lexington has received an offer from an outside vendor to supply any number of burners Lexington requires at $14.80 per burner. The following additional information is available: a. Inspection, setup, and materials-handling costs vary with the number of batches in which the burners are produced. Lexington produces burners in batch sizes of 1,000 units. Lexington will produce the 40,000 units in 40 batches. b. Lexington rents the machine it uses to make the burners. If Lexington buys all of its burners from the outside vendor, it does not need to pay rent on this machine. 1. Assume that if Lexington purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Lexington accept the outside vendors offer at the anticipated volume of 40,000 burners? Show your calculations. 2. For this question, assume that if the burners are purchased outside, the facilities where the burners are currently made will be used to upgrade the grills by adding a rotisserie attachment. (Note: Each grill contains two burners and one rotisserie attachment.) As a consequence, the selling price of grills will be raised by$48. The variable cost per unit of the upgrade would be $38, and additional tooling costs of$160,000 per year would be incurred. On the basis of financial considerations alone, should Lexington make or buy the burners, assuming that 20,000 grills are produced (and sold)? Show your calculations. 3. The sales manager at Lexington is concerned that the estimate of 20,000 grills may be high and believes that only 16,000 grills will be sold. Production will be cut back, freeing up work space. This space can be used to add the rotisserie attachments whether Lexington buys the burners or makes them in-house. At this lower output, Lexington will produce the burners in 32 batches of 1,000 units each. On the basis of financial considerations alone, should Lexington purchase the burners from the outside vendor? Show your calculations.

$$\begin{matrix} \text{ } & \text{Cost per Unit} & \text{Costs for 40.000 Units}\\ \text{Direct materials} & \text{\$ 8.00} & \text{\$ 320.000}\\ \text{Direct manufacturing labor} & \text{4.00} & \text{160.000}\\ \text{Variable manufacturing overhead} & \text{2.00} & \text{80.000}\\ \text{Inspection, setup, materials handling} & \text{ } & \text{8.000}\\ \text{Machine rent} & \text{ } & \text{12.000}\\ \text{Allocated fixed costs of plant administration, taxes, and insurance} & \text{80.000}\\ \text{Total costs} & \text{ } & \text{\$ 660.000}\\ \end{matrix}$$

The Wild Orchid Corporation is working at full production capacity producing 13,000 units of a unique product, Everlast. Manufacturing cost per unit for Everlast is: Manufacturing overhead cost per unit is based on variable cost per unit of $8 and fixed costs of$78,000 (at full capacity of 13,000 units). Marketing cost per unit, all variable, is $4, and the selling price is$52. A customer, the Apex Company, has asked Wild Orchid to produce 3,500 units of Stronglast, a modification of Everlast. Stronglast would require the same manufacturing processes as Everlast. Apex has offered to pay Wild Orchid $40 for a unit of Stronglast and share half of the marketing cost per unit. 1. What is the opportunity cost to Wild Orchid of producing the 3,500 units of Stronglast? (Assume that no overtime is worked.) 2. The Chesapeake Corporation has offered to produce 3,500 units of Everlast for Wild Orchid so that Wild Orchid may accept the Apex offer. That is, if Wild Orchid accepts the Chesapeake offer, Wild Orchid would manufacture 9,500 units of Everlast and 3,500 units of Stronglast and purchase 3,500 units of Everlast from Chesapeake. Chesapeake would charge Wild Orchid$36 per unit to manufacture Everlast. On the basis of financial considerations alone, should Wild Orchid accept the Chesapeake offer? Show your calculations. 3. Suppose Wild Orchid had been working at less than full capacity, producing 9,500 units of Everlast, at the time the Apex offer was made. Calculate the minimum price Wild Orchid should accept for Stronglast under these conditions. (Ignore the previous $40 selling price.)$

$$\begin{matrix} \text{Direct materials} & \text{\$10}\\ \text{Direct manufacturing labor} & \text{2}\\ \text{Manufacturing overhead} & \text{14}\\ \text{Total manufacturing cost} & \text{\$26}\\ \end{matrix}$$

$

Meals Made Easy (MME) operates a meal home-delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who place orders on MME’s website. MME allocates variable and fixed overhead costs on the basis of delivery time. MME’s owner, Thomas Stewart, obtains the following information for May 2017 overhead costs:

$$\begin{matrix} \text{Meals Made Easy (May 2017)} & \text{Actual Results} & \text{Static Budget}\\ \text{Output units (number of deliveries)} & \text{8.750} & \text{13.000}\\ \text{Hours per delivery} & \text{ } & \text{0.70}\\ \text{Hours of delivery time} & \text{5.600} & \text{ }\\ \text{Variable overhead cost per hour of delivery time} & \text{ } & \text{\$ 1.60}\\ \text{Variable overhead costs} & \text{\$ 10.640} & \text{ }\\ \text{Fixed overhead costs} & \text{\$ 39.200} & \text{\$ 36.400}\\ \end{matrix}$$

Compute spending and efficiency variances for MME's variable overhead in May 2017. 2 . Compute the spending variance and production-volume variance for MME's fixed overhead in May 2017. 3. Comment on MME's overhead variances and suggest how Thomas Steward might manage MME's variable overhead differently from its fixed overhead costs.

Discuss four frequently encountered problems when collecting cost data on variables included in a cost function.

Two very long concentric cylinders of diameters $D_1 = 0.35$ m and $D_2 = 0.5 m$ are maintained at uniform temperatures of $T_1 = 950 K$ and $T_2 = 500 K$ and have emissivities $\varepsilon_{1}=1$ and $\varepsilon_{2}=0.55,$ respectively. Determine the net rate of radiation heat transfer between the two cylinders per unit length of the cylinders.

A performance test is being conducted on a double pipe counter flow heat exchanger that carries engine oil and water at a flow rate of 2.5 kg/s and 1.75 kg/s, respectively. Since the heat exchanger has been in service over a long period of time it is suspected that the fouling might have developed inside the heat exchanger that might have affected the overall heat transfer coefficient. The test to be carried out is such that, for a designed value of the overall heat transfer coefficient of $450 W/m^2 \cdot K$ and a surface area of $7.5 m^2,$ the oil must be heated from $25^\circ C$ to $55 ^\circ C$ by passing hot water at $100^\circ C (c_p = 4206 J/kg \cdot K)$ at the flow rates mentioned above. Determine if the fouling has affected the overall heat transfer coefficient. If yes, then what is the magnitude of the fouling resistance?

Ainsley Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2017 follows:

$$\begin{matrix} & \text{Division}\\ & \text{A} & \text{B} & \text{C} & \text{D}\\ \text{Sales} & \text{\$504,000} & \text{\$948,000} & \text{\$960,000} & \text{\$1,240,000}\\ \text{Cost of goods sold} & \text{440,000} & \text{930,000} & \text{765,000} & \text{925,000}\\ \text{Selling, general, and administrative expenses} & \text{96,000} & \text{202,500} & \text{144,000} & \text{210,000}\\ \text{Operating income/loss} & \text{\$(32,000)} & \text{\$(184,500)} & \text{\$51,000} & \text{\$105,000}\\ \end{matrix}$$

Further analysis of costs reveals the following percentages of variable costs in each division:

$$\begin{matrix} \text{Cost of goods sold} & \text{90\\\%} & \text{80\\\%} & \text{90\\\%} & \text{85\\\%}\\ \text{Selling, general, and administrative expenses} & \text{50\\\%} & \text{50\\\%} & \text{60\\\%} & \text{60\\\%}\\ \end{matrix}$$

Closing down any division would result in savings of 40% of the fixed costs of that division. Top management is very concerned about the unprofitable division (A and B) and is considering closing them for the year. 1. Calculate the increase or decrease in operating income if Ainsley closes division A. 2. Calculate the increase or decrease in operating income if Ainsley closes division B. 3. What other factors should the top management of Ainsley consider before making a decision?

Mechum River Anglers, a division of Old Dominion Travel, offers two types of guided fly fishing tours, Basic and Deluxe. Operating income for each tour type in 2014 is as follows:

$$\begin{array}{lrr} & \text { Basic } & \text { Deluxe } \\ \hline \text { Revenues }(500 \times \$ 900 ; 400 \times \$ 1,650) & \$ 450,000 & \$ 660,000 \\ \text { Operating costs } & & \\ \quad\text { Administrative salaries } & 120,000 & 100,000 \\ \quad\text { Guide wages } & 130,000 & 380,000 \\ \quad\text { Supplies } & 50,000 & 100,000 \\ \quad\text { Depreciation of equipment } & 25,000 & 60,000 \\ \quad\text { Vehicle fuel } & 30,000 & 24,000 \\ \quad\text { Allocated corporate overhead } & 45,000 & 66,000 \\ \quad\quad\text { Total operating costs } & \underline{~~400,000} & \underline{~~~730,000} \\ \text { Operating income }(\text { loss) } & \underline{\underline{\$~~40,000}} & \underline{\underline{\$(70,000)}} \end{array}$$

The equipment has a zero disposal value. Guide wages, supplies, and vehicle fuel are variable costs with respect to the number of tours. Administrative salaries are fixed costs with respect to the number of tours. Brad Barrett, Mechum River Anglers’ president, is concerned about the losses incurred on the deluxe tours. He is considering dropping the deluxe tour and offering only the basic tour.

1. If the deluxe tours are discontinued, one administrative position could be eliminated, saving the company $50,000. Assuming no change in the sales of basic tours, what effect would dropping the deluxe tour have on the company’s operating income?

2. Refer back to the original data. If Mechum River Anglers drops the deluxe tours, Barrett estimates that sales of basic tours would increase by 50%. He believes that he could still eliminate the$50,000 administrative position. Equipment currently used for the deluxe tours would be used by the additional basic tours. Should Barrett drop the deluxe tour? Explain.

3. What additional factors should Barrett consider before dropping the deluxe tours?

Nelson River Tours, a division of Old World Travel, offers two types of guided fishing tours, Beginner and Advanced. Operating income for each tour type in 2017 is as follows: The equipment has a zero disposal value. Guide wages, supplies, and vehicle fuel are variable costs with respect to the number of tours. Administrative salaries are fixed costs with respect to the number of tours. Dennis Baldwin, Nelson River Tours’ president, is concerned about the losses incurred on the Advanced tours. He is considering dropping the Advanced tour and offering only the Beginner tour.

$$\begin{matrix} & \text{Beginner} & \text{Advanced}\\ \text{Revenues (1,000}{\times \$900; 800}{\times \$1,650)} & \text{\$900,000} & \text{\$1,320,000}\\ \text{Operating costs}\\ \text{Administrative salaries} & \text{240,000} & \text{200,000}\\ \text{Supplies} & \text{100,000} & \text{200,000}\\ \text{Depreciation of equipment} & \text{50,000} & \text{120,000}\\ \text{Vehicle fuel} & \text{60,000} & \text{48,000}\\ \text{Allocated corporate overhead} & \text{90,000} & \text{132,000}\\ \text{Total operating costs} & \text{800,000} & \text{1,460,000}\\ \text{Operating income(loss)} & \text{\$100,000} & \text{\$(140,000)}\\ \end{matrix}$$

1. If the Advanced tours are discontinued, one administrative position could be eliminated, saving the company $100,000. Assuming no change in the sales of Beginner tours, what effect would dropping the Advanced tour have on the company's operating income? 2. Refer back to the original data. If Nelson River Tours drops the Advanced tours, Baldwin estimates that sales of Beginner tours would increase by 50%. He believes that he could still eliminate the$100,000 administrative position. Equipment currently used for the Advanced tours would be used by the additional Beginner tours. Should Baldwin drop the Advanced tour? Explain. 3. What additional factors should Baldwin consider before dropping the Advanced tours?

Cocoa Mill Chocolates manufactures specialty chocolates and sells them to fine candy stores. The company operates two divisions, cocoa and candy, as decentralized entities. The cocoa division purchases raw cacao beans and processes them into cocoa powder. The candy division purchases cocoa powder and other ingredients and uses them to produce gourmet chocolates. The cocoa division is free to sell processed cocoa to outside buyers, and the candy division is free to purchase processed cocoa from other sources. Currently, however, the cocoa division sells all of its output to the candy division, and the candy division does not purchase materials from outside suppliers. The processed cocoa is transferred from the cocoa division to the production division at 110% of full cost. The cocoa division purchases raw cacao beans for $4 per pound. The cocoa division uses 1.25 pounds of raw cacao beans to produce one pound of processed cocoa. The division’s other variable costs equal$1.25 per pound of output, and fixed costs at a monthly production level of 20,000 pounds of cocoa are $0.75 per pound. During the most recent month, 20,000 pounds of processed cocoa were transferred between the two divisions. The cocoa division’s capacity is 25,000 pounds of output. With the increase in demand for dark chocolate, the candy production division expects to use 22,000 pounds of cocoa next month. Franklin Foods has offered to sell 2,000 pounds of cocoa next month to the candy production division for$7.50 per pound. 1. Compute the transfer price per pound of processed cocoa. If each division is considered a profit center, would the candy production manager choose to purchase 2.000 pounds next month from Franklin Foods? 2. What would be the cost to Cocoa Mill Chocolates if the 2.000 pounds had been produced by the cocoa division and transferred to the candy division? Is the external purchase in the best interest of Cocoa Mill Chocolates? What is the cause of this goal incongruence? 3. The candy division manager suggests that $7.50 is now the market price for processed cocoa, and that this should be the new transfer price. Cocoa Mill's corporate management tends to agree. The cocoa division manager is suspicious. Franklin's prices have always been much higher than$7.50 per pound. Why the sudden price cut? After further investigation by the cocoa division manager, it is revealed that the $7.50 per pound price was a one-time-only offer made to the candy division due to excess inventory at Franklin. Future orders would be priced at$8.00 per pound. Comment on the validity of the $7.50 per pound market price and the ethics of the candy manager. Would changing the transfer price to$7.50 matter to Cocoa Mill Chocolates?

Consider a large plane wall of thickness L = 0.8 ft and thermal conductivity $k = 1.2 Btu/h \cdot ft \cdot ^\circ F.$ The wall is covered with a material that has an emissivity of $\varepsilon=0.80$ and a solar absorptivity of $\alpha = 0.60.$ The inner surface of the wall is maintained at $T_1= 520 R$ at all times, while the outer surface is exposed to solar radiation that is incident at a rate of $\dot{q}_{\text { solar }}=300 \mathrm{Btu} / \mathrm{h} \cdot \mathrm{ft}^{2}.$ The outer surface is also losing heat by radiation to deep space at 0 K. Determine the temperature of the outer surface of the wall and the rate of heat transfer through the wall when steady operating conditions are reached.

In a power plant, pipes transporting superheated vapor are very common. Superheated vapor is flowing at a rate of 0.3J kg/s inside a pipe with 5cm in diameter and 10m in length. The pipe is located in a power plant at $20^\circ C,$ and has a uniform pipe surface temperature of $100^\circ C.$ If the temperature drop between the inlet and exit of the pipe is $30^\circ C,$ and the specific heat of the vapor is $2190 J/kg \cdot K,$ determine the heat transfer coefficient as a result of convection between the pipe surface and the surrounding.

An iron is left unattended and its base temperature rises as a result of resistance heating inside. When will the rate of heat generation inside the iron be equal to the rate of heat loss from the iron?

For each function, name the enzyme or ribozyme that performs the function. i. Transcribes RNA from a DNA template ii. Synthesizes a complementary DNA strand from an RNA template iii. Replicates DNA from a DNA template iv. Replicates RNA from an RNA template