The budget analysis shows that the labor hours of the firm are higher than the budgeted amount. As such, the firm needs to evaluate the cost benefit analysis of making or buying their products. To make this decision, various factors need to be considered. Before making the decision, Peyton needs to evaluate the marginal costs and revenue of making versus buying the products. The firm should take the option which provides the highest marginal profit which is the
In January, Reyes Tool & Dye requisitions raw materials for production as follows: Job 1 $960, Job 2 $1,630, Job 3 $720, and general factory use $680. During January, time tickets show that the factory labor of $6,100 was used as follows: Job 1 $1,570, Job 2 $1,940 Job 3 $1,670, and general factory use $920. Prepare the job cost sheets for each of the three jobs. (If answer is zero, please enter 0, do not leave any fields blank.) Job 1 Date 1/31 1/31 Direct Materials 960 0 Job 2 Date 1/31 1/31 Direct Materials 1630 0 Job 3 Date 1/31 1/31 Direct Materials 720 0 0 1670 Direct Labor 0 1,940 Direct Labor 0 1570 Direct Labor
The Ilarion Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $117,000 of manufacturing overhead for an estimated allocation base of $90,000 direct labor dollars. The company has provided the following data in the form of an Excel worksheet:
A manufacturing company sells its products directly to customers and operates 5 days a week, 52 weeks a year. The production department of this company can produce at the rate of 60 units per day. The setup cost for a production run is $ 125.00. The cost of holding is $ 4.00 per unit per year. The demand for the item is continuous and constant and is 3,900 units per year. (Note: The demand occurs only when the company is operating, that is, 5 days a week for 52 weeks). Find the optimum number of units to be produced in one batch (economic production quantity). Round the number to nearest integer.
iii. Determine the amount of cost that should be assigned to the ending work in process inventory.
This round I continued to increase the production schedule. Daze is about 1,900, Dell is about 1,600, Dixie is about 920, Dot is about 700, and Dune is about 700. Dot is the only product that has an inventory of about 20. I decided to increase the capacity to 9 for all the segments. This complemented the increase of production because the investment workforce is about $1,163. I have to say that the total labor cost for each unit is accurate enough to help with the financial budgeting. Daze is about $17.21, Dell is about $11.97, Dixie is about $22.70, Dot is about 21.33, and Dune is about $21.20. I did not touch the automation because it was not necessary to do so. I noticed that units sold have fluctuated for each of product. Daze is about 1782, Dell is about 1386, Dixie is about 891, Dot is about 574, and Dune is about 584 with a 99% plant utilization through each of the products. Our competitors such as cake are about 3,784 with units sold of 228 on inventory and 151% in plant utilization. Cedar is
the start of work in the Grinding Department. The Work in Process T-account for the Griding Department for May is given below: Work in Process-Grinding Department Inventory, May 1 Completed and transferred 21,800 ? Materials to the Mixing Department 133,400 Conversion 225,500 Inventory, May 31 ? The May 1 work in process inventory consisted of 18,000 pounds with $14,600 in materials cost and $7,200 in conversion cost. The May 1 work in process inventory was 100% complete with respect to materials and 30% complete with respect to conversion. During May, 167,000 pounds were started into production. The May 31 inventory consisted of 15,000 pounds that were 100% complete with respect to materials and 60% complete with respect to conversion. The company uses the weighted-average method to account for units and costs. Required a. Determine the equivalent units of production for May. b. Determine the costs per equivalent units for May. c. Determine the cost of the units completed and transferred to Mixing Department dusing May.
Step 3: From the calculation above, the management consider that 16 557 unit of demand/production is the break-even point for the whole three processes. Compare the fix cost and the variables cost three processes between Metal Drawing Process, Outsourcing and Plastic
This case study will look at Jokkmok Industries and one of its managers, Mr. Rosen, who is bucking for a promotion to CEO. His division uses absorption costing and has the ability to produce 50,000 units a quarter with a fixed overhead amount of $600,000. While the sales forecast shows that the company will only sell 25,000 units during each of the next two quarters, Mr. Rosen wants to double his budgeted production for the second quarter from 25,000 to 50,000 units. We will look at Mr. Rosen’s decision and see how it affects his company’s bottom line by putting the figures from last quarter and the next quarter into an absorption income statement and a contribution margin statement. From this we will be able to see the differences in
XYZ Co. uses a job order cost accounting system. At year-end the work in process Inventory controlling account showed a debit balance of $57,500. For the two jobs in process at year-end, one showed $8,000 in direct materials and $6,000 in direct labour. The job cost sheet for the second job showed $12,000 in direct material and $9,000 in direct labour. If the company is using a predetermined overhead application rate based on direct labour cost, the rate is:
1. The following data have been recorded for recently completed Job 501 on its job cost sheet. Direct materials cost was $3,067. A total of 30 direct labor-hours and 104 machine-hours were worked on the job. The direct labor wage rate is $12 per labor-hour. The company applies manufacturing overhead on the basis of machinehours. The predetermined overhead rate is $11 per machine-hour. The total cost for the job on its job cost sheet would be: A. $4,571 B. $3,757 C. $3,090 D. $3,427 Applied manufacturing overhead = Predetermined overhead rate x Actual machine-hours Applied manufacturing overhead = $11 x 104 Applied manufacturing overhead = $1,144 Total cost = Direct materials + Direct labor + Applied manufacturing
Accounting to determine which items or jobs are generating the most net income can be extremely important to financial managers in today’s economy. Managers must determine which products are making performing the best so that they can capitalize on profits. This also helps to know when it should cut its losses. There are three very useful methods of identifying costs associated to a particular item which are job order costing, activity based costing (ABC), process costing. Job order costing isolates costs to a particular job. ABC compares multiple items which are manufactured. Process costing assesses items which are massed produced and provides analysis to the cost through the various stages from beginning to completion. This essay will explain each of these methods and then provide examples for each of them.
Each of these products can be produced in either of two plants. For administrative reasons, management has imposed a second restriction in this regard. Just one of the two plants should be chosen to be sole producer of the new products. The production cost per unit of each product would be essentially the same in the two plants. However, because of differences in their production facilities, the number of the hours of production time needed per unit of each product might differ between the two plants. These data are given in the table below, including marketing estimate of the number of units of each product that could be sold per week. The objective is to choose the products, the plant and the production rates so as to maximize the profit. Production Time Used for each unit Product 1 Product 2 3h 4h 4h 6h 5 7 7 5 Product 3 2h 2h 3 9 Production Time Available per week 30h 40h Thousands of dollars Units per week
A job order cost system uses a predetermined overhead rate based on estimated activity and estimated manufacturing overhead cost. At the end of the year, underapplied overhead might be explained by which of the following situations?
Question : 3 The Chakrapani Ltd 's Cost behaviour is as follows: Production range in units 0- 20000 20001 - 65000 65001 - 90000 90001 - 100000 Fixed cost Rs. 160000 Rs. 190000 Rs. 210000 Rs. 250000