Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

Binder Manufacturing produces small electric motors used by appliance manufacturers. In the past year, the company has experienced severe excess capacity due to competition from a foreign company that has entered Binder's market. The company is currently bidding on a potential order from Dacon Appliances for 6,000 Model 350 motors. The estimated cost of each motor is $40, as follows:
Direct material $20
Direct labor $5
Overhead $15
Total $40

The predetermined overhead rate is $3 per direct labor dollar. This was estimated by dividing estimated annual overhead ($15,000,000) by estimated annual direct labor ($5,000,000). The $15,000,000 of overhead is composed of $6,000,000 of variable costs and $9,000,000 of fixed costs. The largest fixed cost relates to depreciation of plant and equipment.

REQUIRED

a. With respect to overhead, what is the opportunity cost of producing a Model 350 motor?

b. Suppose Binder can win the Dacon business by bidding a price of $37 per motor (but no higher price will result in a winning bid). Should Binder bid $37?

c. Discuss how an allocation of overhead based on opportunity cost would facilitate an appropriate bidding decision.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M928583

Have any Question? 


Related Questions in Business Management

Discussionthe somech desivilya and lidogoster 2009 article

Discussion The Somech, Desivilya, and Lidogoster (2009) article recaps a study that showed an increase in team performance when the cooperative style of conflict management was utilized in teams that exhibited high level ...

Review the following articlesarticle 1article 2article

Review the following articles: Article 1 Article 2 Article 3 Based on the religious discrimination lawsuits outlined in the articles, imagine that you work for a retail store, and you were asked to develop training for e ...

Research a domestic company that has not performed well

Research a domestic company that has not performed well overseas. Using the concepts presented in the required readings, identify circumstances that may affect the decision to downsize and withdraw from the country. Why ...

Stages of the research processindustry will be provided

Stages of the Research Process Industry will be provided once HandShake is made. Purpose of Assignment The importance of peer-reviewed studies is vital in business research. Students will have the opportunity to find exa ...

Explain how adveristing research and marketing fits into

Explain how adveristing research and marketing fits into the product life cycle?

Provide 2-3 policy options that can be implemented for the

Provide 2-3 policy options that can be implemented for the problem of determining capacity to consent. As the number of individuals with cognitive impairment continue to rise, so will the number of people with questionab ...

Martin decides to open a new factory his production

Martin decides to open a new factory, his production function for the new factory is q = kl. a) Find his short-run cost function for a fixed level of capital, . b) Suppose that w = 10, R = 20 and capital is fixed to 5 un ...

The keflavik paper company is a case with a problem in

The Keflavik Paper Company is a case with a problem in determining a project management process for new product development. Answer the following questions: What does this case demonstrate about the effect of poor projec ...

1 creating a perceptual map for the industries walmart and

1. Creating a Perceptual map for the industries (Walmart and Target) and at least 4 other competitors including quality and quantity 2. Identifying the trends of Walmart and Target within the SWOTT analysis Please provid ...

1 how does a monopsonist benefit by administering price

1. How does a monopsonist benefit by administering price discrimination? 2. What does the Cournot model and the Bertean models have in common? What is the difference about the two models?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro