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Answer:
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Step-by-step explanation:
2-A1 (20-25 Min.)
1. The cost driver for both resources is number of times the plant is cleaned. Labor cost is a fixed-cost resource, and cleaning supplies is a variable cost. Costs for cleaning between 4 and 8 times a month are:
Number of
times plant Square Feet Cleaning Supplies Cost per
is cleaned Cleaned Labor Cost Cost** Total cost Cleaning
4 200,000* $21,000 $ 8,000*** $29,000 $7,250
5 250,000 21,000 10,000 31,000 $6,200
6 300,000 21,000 12,000 33,000 $5,500
7 350,000 21,000 14,000 35,000 $5,000
8 400,000 21,000 16,000 37,000 $4,625
* 4 × 50,000 square feet
** Cleaning supplies cost per time the plant is cleaned = $8,000 ÷ 4 = $2,000
*** $2,000 per cleaning × number of times plant is cleaned
The predicted total cost to clean the plant during the next quarter is the sum of the total costs for monthly cleanings of 5, 6, and 8 times. This is
$31,000 + $33,000 + $37,000 = $101,000
2. If Napco hires the outside cleaning company, all its cleaning costs will be variable at a rate of $5,700 per cleaning. The cost driver will be “number of times cleaned.” The predicted cost to clean a total of 5 + 6 + 8 = 19 times is 19 × $5,700 = $108,300. Thus, Napco will save by not hiring the outside cleaning company.
The table below shows the total costs for the two alternatives. If Napco expects average “times cleaned” to be 6 or more, it would save by cleaning with its own employees. If Napco expects to average 5 or fewer cleanings per month, it would save by outsourcing.
Napco Cleans Plant
Outsource Cleaning Plant
Times Cleaned
Napco
Times Cleaned
Outside
4
$ 29,000
4
$22,800
5
31,000
5
28,500
6
33,000
6
34,200
7
35,000
7
39,900
8
37,000
8
45,600
Answer: n = 2(2C-3)/5
Step-by-step explanation:
[tex]\begin{array}{l}C=1.5+1.25n\\\\100\ \cdot\ \left(1.5+1.25n=C\right)\ \cdot100\\\\150+125n=C\cdot100\\\\150+125n-150=C\cdot100-150\\\\125n=C\cdot100-150\\\\\frac{125n}{125}=\frac{C\cdot100}{125}-\frac{150}{125}\\\\n=\frac{100C-150}{125}\\\\n=\frac{50\left(2C-3\right)}{125}\\\\n=\frac{2\left(2C-3\right)}{5}\end{array}[/tex]
