Problem 10 schedule. Management wishes to use a system of selective control. The followingProblem 10The Melon Manufacturing Company uses several raw materials in its productionschedule. Management wishes to use a system of selective control. The followinedata have been completed.Yearly Usage x Unit Cost10,0007,1002,0005,2506,0002,7501,5005,50040,100Total Cost5,0004,6155,00010,50010,5002,2001,50010,175P.Materials1 x 1P 0.500.652.501 x 21 x 31 х 42.001 х51 х61 x 71 x 81.750.801.001.85P 49.490Required: Assume that management adopts the ABC plan, prepare the necessarychart

ABC Analysis It is important for the valuation of inventory which are used for the entity as…

Answered: 1 x 8 5,500 40,100 10,175 P 49.490 1.85…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 4PA: April Industries employs a standard costing system in the manufacturing of its sole product, a park...

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Pinter Company had the following environmental activities and product information: 1. Environmental activity costs 2. Driver data 3. Other production data Required: 1. Calculate the activity rates that will be used to assign environmental costs to products. 2. Determine the unit environmental and unit costs of each product using ABC. 3. What if the design costs increased to 360,000 and the cost of toxic waste decreased to 750,000? Assume that Solvent Y uses 6,000 out of 12,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 14,250 of 15,000 pounds of toxic waste. What is the new environmental cost for Solvent Y?
The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September and March for three different resources associated with materials handling. The number of moves is the driver. The total costs of the three resources and the activity output, as measured by moves for the two different levels, are presented as follows: Required: 1. Determine the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components. 2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 9,000 moves. 3. Construct a cost formula that can be used to predict the total cost of the three resources combined. Using this formula, predict the total materials handling cost if activity output is 9,000 moves. In general, when can cost formulas be combined to form a single cost formula?
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.
Refer to the data in Problem 9.34. Vet-Pro, Inc., also uses two different types of direct labor in producing the anti-anxiety mixture: mixing and drum-filling labor (the completed product is placed into 50-gallon drums). For each batch of 20,000 gallons of direct materials input, the following standards have been developed for direct labor: The actual direct labor hours used for the output produced in March are also provided: Required: 1. Compute the direct labor mix and yield variances. (Round standard price of yield to four significant digits.) 2. Compute the total direct labor efficiency variance. Show that the total direct labor efficiency variance is equal to the sum of the direct labor mix and yield variances. Vet-Pro, Inc., produces a veterinary grade anti-anxiety mixture for pets with behavioral problems. Two chemical solutions, Aranol and Lendyl, are mixed and heated to produce a chemical that is sold to companies that produce the anti-anxiety pills. The mixture is produced in batches and has the following standards: During March, the following actual production information was provided: Required: 1. Compute the direct materials mix and yield variances. 2. Compute the total direct materials usage variance for Aranol and Lendyl. Show that the total direct materials usage variance is equal to the sum of the direct materials mix and yield variances.
Young Company is beginning operations and is considering three alternatives to allocate manufacturing overhead to individual units produced. Young can use a plantwide rate, departmental rates, or activity-based costing. Young will produce many types of products in its single plant, and not all products will be processed through all departments. In which one of the following independent situations would reported net income for the first year be the same regardless of which overhead allocation method had been selected? a. All production costs approach those costs that were budgeted. b. The sales mix does not vary from the mix that was budgeted. c. All manufacturing overhead is a fixed cost. d. All ending inventory balances are zero.
Product decisions under bottlenecked operations Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows: Mills operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follows: The Marketing Department is considering a new marketing and sales campaign. Which product should be emphasized in the marketing and sales campaign in order to maximize profitability?
In 20x2, Choctaw Company implements a new process affecting labor and materials. The following reported data are provided to evaluate the effect on the companys productivity: Required: 1. Calculate the productivity profile for 20x1. 2. Calculate the productivity profile for 20x2, and comment on the effect of the new production and assembly process. 3. What if the labor hours used in 20x2 were 112,500? What does comparison of the 20x1 and 20x2 profiles now communicate?
Making journal entries Assume that during the month of April the production report of Algonquin Adhesives Inc. in E8-10 revealed the following information: Make journal entries to charge materials (use the materials purchase price variance) and labor to Work in Process. (Remember to retrieve the standard costs from E8-10 before solving this exercise.)
Lampierre makes brass and gold frames. The company computed this information to decide whether to switch from the traditional allocation method to ABC: The estimated overhead for the material cost pool is estimated as $12,500, and the estimate for the machine setup pool is $35,000. Calculate the allocation rate per unit of brass and per unit of gold using: A. The traditional allocation method B. The activity-based costing method
Cassien Inc. manufactures products that pass through two or more processes. During June, equivalent units were computed using the weighted average method: Required: 1. Calculate the unit cost for June using the weighted average method. 2. Using the weighted average method, determine the cost of EWIP and the cost of the goods transferred out. 3. CONCEPTUAL CONNECTION Cassien had just finished implementing a series of measures designed to reduce the unit cost to 2.00 and was assured that this had been achieved and should be realized for Junes production. Yet, upon seeing the unit cost for June, the president of the company was disappointed. Can you explain why the full effect of the cost reductions may not show up in June? What can you suggest to overcome this problem?
Potter Company has installed a JIT purchasing and manufacturing system and is using back-flush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: 40,500 labor plus 222,750 overhead. There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required: Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods.
Jameson Company produces paper towels. The company has established the following direct materials and direct labor standards for one case of paper towels: During the first quarter of the year, Jameson produced 45,000 cases of paper towels. The company purchased and used 135,700 pounds of paper pulp at 0.38 per pound. Actual direct labor used was 91,000 hours at 12.10 per hour. Required: 1. Calculate the direct materials price and usage variances. 2. Calculate the direct labor rate and efficiency variances. 3. Prepare the journal entries for the direct materials and direct labor variances. 4. Describe how flexible budgeting variances relate to the direct materials and direct labor variances computed in Requirements 1 and 2.

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1 x 8 5,500 40,100 10,175 P 49.490 1.85 Required: Assume that management adopts the ABC plan, prepare the necessar chart