Crane, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $88,010 were estimated. An analysis of estimated overhead costs reveals the following activities. 1.. Materials handling 2. Machine setups 3. Activities Quality inspections (a) The cost driver volume for each product was as follows. Cost Drivers Number of requisitions Number of setups Number of inspections Materials handling $ Machine setups Cost Drivers $ Number of requisitions Number of setups Number of inspections Quality inspections $ Instruments Gauges 390 200 240 Determine the overhead rate for each activity. 640 295 265 Total Cost $37,080 28,710 22,220 $88,010 Total 1,030 495 505 Overhead Rate per requisition per setup per inspection

Crane, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $88,010 were estimated. An analysis of estimated overhead costs reveals the following activities. 1.. Materials handling 2. Machine setups 3. Activities Quality inspections (a) The cost driver volume for each product was as follows. Cost Drivers Number of requisitions Number of setups Number of inspections Materials handling $ Machine setups Cost Drivers $ Number of requisitions Number of setups Number of inspections Quality inspections $ Instruments Gauges 390 200 240 Determine the overhead rate for each activity. 640 295 265 Total Cost $37,080 28,710 22,220 $88,010 Total 1,030 495 505 Overhead Rate per requisition per setup per inspection

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 13E: Wyandotte Company provided the following information for the last calendar year: During the year,...

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During the week of June 12, Harrison Manufacturing produced and shipped 15,000 units of its aluminum wheels: 3,000 units of Model A and 12,000 units of Model B. The following costs were incurred: Required: 1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy. 2. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. What if Model A is responsible for 40 percent of the materials cost? Show how the unit cost would be adjusted for this condition.
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
During the week of May 10, Hyrum Manufacturing produced and shipped 16,000 units of its aluminum wheels: 4,000 units of Model A and 12,000 units of Model B. The cycle time for Model A is 1.09 hours and for Model B is 0.47 hour. The following costs and production hours were incurred: Required: 1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy. 2. Assume that Model A is responsible for 40% of the materials cost. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. Calculate the unit cost for the two models, using DBC. Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2.
Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: aCalculated using number of dies as the single unit-level driver. bCalculated by multiplying the consumption ratio of each product by the cost of each activity. Required: 1. Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. 2. Calculate the error relative to the fully specified ABC product cost and comment on the outcome. 3. What if activities 1, 2, 5, and 8 each had a cost of 650,000 and the remaining activities had a cost of 50,000? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Comment on the implications for the approximately relevant approach.
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. 3. Of the unit manufacturing cost calculated in Requirement 2, 2.70 is direct materials and 5.30 is overhead. What is the prime cost per unit? Conversion cost per unit?
Using the same data found in Exercise 6.22, assume the company uses the FIFO method. Required: Prepare a schedule of equivalent units, and compute the unit cost for the month of December. Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was 40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments. The second department (Polishing) had the following physical flow schedule for December: Costs in beginning work in process for the Polishing Department were direct materials, 5,000; conversion costs, 6,000; and transferred in, 8,000. Costs added during the month: direct materials, 32,000; conversion costs, 50,000; and transferred in, 40,000.
Wyandotte Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 256,900, direct labor cost was 176,000, and overhead cost was 308,400. There were 40,000 units produced. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. 3. Of the unit manufacturing cost calculated in Requirement 2, 6.62 is direct materials and 7.71 is overhead. What is the prime cost per unit? Conversion cost per unit?
On May 1, Athens Inc. began the manufacture of a new mechanical device known as Snap. The company installed a standard cost system in accounting for manufacturing costs. The standard direct materials and labor costs for a unit of Snap follow: The following data came from Athens’ records for May: The amount shown above for the materials price variance is applicable to raw materials purchased during May. Required: Compute each of the following items for Athens for May. Show computations in good form. Standard quantity of raw materials allowed (in pounds) for actual production. Actual quantity of raw materials used (in pounds). (Hint: Be sure to consider the materials quantity variance.) Standard direct labor hours allowed. Actual direct labor hours worked. (Hint: Be sure to consider the direct labor efficiency variance.) Actual direct labor rate. (Hint: Be sure to consider the direct labor rate variance.)
Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000
Lansing. Inc., provided the following data for its two producing departments: Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required: 1. Calculate the overhead rates for each department. 2. Using departmental rates, assign overhead to live two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours? 3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $83.160 were estimated. An analysis of estimated overhead costs reveals the following activities. 1 Materials handling 2 Machins setups Quality inspections 3 Activities The cost driver volume for each product was as follows Cost Drivers Number of requisitions Number of setups Number of inspections Materials handling (b) Machine setups Quality inspections 5 Determine the overhead rate for each activity. Cost Drivers Number of requisitions Number of setups Number of inspections Instruments Gauges Total cost assigned 3 Overhead cost per Unit 405 180 240 5 Total 625 1,030 340 520 250 490 Overhead Rate Total Cost 34 $3 Instruments $35,020 27,560 20,500 $83,160 Assign the manufacturing overhead costs for April to the two products using activity-based costing (Round per unit answers to 2 decinal places,…
The controller of PUSO Co. estimates the amount of materials handling overhead cost that should be allocated to the firm's two product using the data below: Specialty Windows 7,000 Wall Mirrors Total expected units produced Total expected materials move Expected direct labor per unit 8,000 900 300 7 5 The total materials handling cost for the year is expected to be P38, 448. If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total material handling cost should be allocated to the specialty windows?