The manager at the Screen Saver Manufacturing manufactures screen savers
The manager continues to find ways to reduce manufacturing costs and the manager received a proposal from Entrepreneurial Consultants to rearrange the production in the upcoming year. The managerial accountant provided the following information:
Current Proposed
Total number of workers per year 5 4
Total hourly wage rate, per hour $12.00 $14.00
Total hours worked, per employee 2,300 2,150
Required
Compute the current and proposed information and decide whether management should accept the proposal. Which of the following decisions should management accept?
A) $138,000; Current
B) $120,400 Proposed
C) $118,000; Current
D) $124,000; Proposed
E) $180,000; Proposed
B
Explanation: B) Current Operations: [(5 × 2,300 × $12)] = $138,000
Proposed Operations: [(4 × 2,150 × $14)] = $120,400
The proposed cost is less. The manager should rearrange the operations. $120,400
You might also like to view...
The interest rate is composed of the ________ and the ________
A) risk-free rate; risk discount B) risk-free rate; risk premium C) risk-free rate; default risk premium D) None of the above.
McDonald's stock currently sells for $103. It's expected earnings per share are $5.50. The average P/E ratio for the industry is 24
If investors expected the same growth rate and risk for McDonald's as for an average firm in the same industry, it's stock price would A) stay about the same. B) rise. C) fall. D) there is not enough information.