Question 4 (10 Marks) The Brightlight Corporation uses multicolored molding to make plastic lamps. The molding...

Question 4 (10 Marks) The Brightlight Corporation uses multicolored molding to make plastic lamps. The molding operation has a capacity of 200,000 units per year. The demand for lamps is very strong. Brightlight will be able to sell whatever output quantities it can produce at $65 per lamp. Brightlight can start only 200,000 units into production in the molding department because of capacity constraints on the molding machines. If a defective unit is produced at the molding operation, it must be scrapped at a net disposal value of zero. Of the 200,000 units started at the molding operation, 15,000 defective units (10%) are produced. The cost of a defective unit, based on total (fixed and variable) manufacturing costs incurred up to the molding operation, equals$25 per unit, as follows: $13 per unit$3 per unit Direct materials (variable) Direct manufacturing labour, setup labour, and materials-handling labour (variable) Equipment, rent, and other allocated overhead, including inspection and testing costs on scrapped parts (fixed) Total $9 per unit$25 per unit Brightlight's designers have determined that adding a different type of material to the existing direct materials would result in no defective units being produced, but it would increase the variable costs by $4 per lamp in the molding department. Required: a. On financial considerations alone, should Brightlight use the new material? Show your calculations. (6 marks) b. Briefly explain two non-financial and/or qualitative factors that Brightlight should consider in making the decision. (4 marks) Answers Similar Solved Questions 1 answer Please mark ALL correct answers A) Pure monopoly is supported by far-away (large) minimum efficiency scales... Please mark ALL correct answers A) Pure monopoly is supported by far-away (large) minimum efficiency scales B) Pure monopoly requires blocked entry, else economic profits would invite competition Smaller the minimum efficiency scale, stronger the monopoly D) Patents may help creating a monopoly CD) ... 1 answer Part A State the law of conservation of energy The law of conservation of energy states... Part A State the law of conservation of energy The law of conservation of energy states that energy can neither be created or destroyed. Energy can be transferred from one object to another, and it can assume different forms. The law of conservation of energy states that energy can not be created bu... 1 answer Computer equipment was acquired at the beginning of the year at a cost of$58,808 that...
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Exercise 6 Our Co's packaging department started April with a beginning WIP inventory of 90 units....
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