Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 15, Problem 2CE
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.
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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
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1. M Materials handling
Machine setups
Quality inspections
2.
3.
Activities
(a)
The cost driver volume for each product was as follows.
Cost Drivers
Number of requisitions
Number of setups
Number of inspections
Materials handling
Cost Drivers
Machine setups
Number of requisitions
Number of setups
Number of inspections
Quality inspections $
Instruments Gauges
390
200
240
640
Determine the overhead rate for each activity.
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
A company manufactures a product with three models, each with different direct material costs and labour hour required and monthly production volume as follows:
Labor rate is $10 per hour. The total manufacturing overhead is estimated to be $103,000 per month.
Required:
a) The manufacturing overhead is allocated to the three models based on labor hour. Compute the pre-determined overhead rate and the unit product cost of Model A.
b) The company is considering to use the activity-based costing and gathers the following data related to the cost and activities:
Model A
Model B
Model C
Units of production
1,700
1,200
1,100
Labour hour required
0.3
0.6
0.7
Direct material costs
30
40
50
Expected Activity
Activity Cost Pool
Overhead Costs
Model A
Model B
Model C
Activity 1
$30,000
1,000
600
400…
The controller of Ferrence Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:
The total materials handling cost for the year is expected to be $16,486.40.
If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost should be allocated to the specialty windows? (Round off your answer to the nearest whole dollar.)
Question 12 options:
$3,266
$9,274
$8,243
$6,595
Chapter 15 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 15 - Prob. 1DQCh. 15 - What are the five principles of lean thinking?Ch. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Explain how lean manufacturing is able to produce...Ch. 15 - What role does a demand-pull system have on lean...Ch. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - What is the purpose of assigning facility costs to...Ch. 15 - Why are units shipped used to calculate the...
Ch. 15 - When will the average unit cost be useful for...Ch. 15 - Explain why changes in value-stream profitability...Ch. 15 - Prob. 13DQCh. 15 - Prob. 14DQCh. 15 - What is productivity measurement?Ch. 15 - Prob. 16DQCh. 15 - Prob. 17DQCh. 15 - Discuss the advantages and disadvantages of...Ch. 15 - Prob. 19DQCh. 15 - Prob. 20DQCh. 15 - What is profit-linked productivity measurement and...Ch. 15 - Prob. 22DQCh. 15 - What is the price-recovery component?Ch. 15 - Anderson Company has the following departmental...Ch. 15 - During the week of June 12, Harrison Manufacturing...Ch. 15 - In 20x2, Choctaw Company implements a new process...Ch. 15 - Refer to Cornerstone Exercise 15.3. Choctaw...Ch. 15 - Prob. 5ECh. 15 - Bienestar Inc., has the following departmental...Ch. 15 - Bienestar, Inc., implemented cellular...Ch. 15 - Henderson, Inc., has just created five order...Ch. 15 - Prob. 9ECh. 15 - Shorts Manufacturing, Inc., has implemented lean...Ch. 15 - The following Box Scorecard was prepared for a...Ch. 15 - Prob. 12ECh. 15 - Carsen Company produces handcrafted pottery that...Ch. 15 - Helena Company needs to increase its profits and...Ch. 15 - Helena Company needs to increase its profits and...Ch. 15 - Prob. 16ECh. 15 - Lean manufacturing is characterized by all but one...Ch. 15 - Lean manufacturing uses value streams to produce a...Ch. 15 - A manufacturing cell within a value stream is...Ch. 15 - Total productive efficiency is achieved when both...Ch. 15 - The following information is given for a...Ch. 15 - Sixty employees (all CPAs) of a local public...Ch. 15 - Sixty employees (all CPAs) of a local public...Ch. 15 - Bradford Company, a manufacturer of small tools,...Ch. 15 - Continuous improvement is the governing principle...Ch. 15 - Prob. 26PCh. 15 - Jadlow Company produces handcrafted leather...Ch. 15 - Prob. 28P
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