7. The Yellow Company has the capacity to manufacture 20,000 units per month. However, present plans call for monthly production and sales of 15,000 units at P21.00 each. Costs per unit are as follows: Direct materials P7.00 Direct labor 4.20 Variable factory overhead Fixed factory overhead Variable marketing expenses Fixed administrative expenses 1.05 2.10 0.35 1.40 P16.10 Total Assume that Yellow Company accepted a special order of 5,000 units at P15.00 per unit, the decrease or increase in contribution margin shall amount to a. P5,500 decrease b. P12,000 decrease c. P12,000 increase d. P13,750 increase e. None of these; answer is 8. Refer to no. 7. The unit cost figure the company would use in costing inventory using direct costing is a. P12.25 b. P12.60 c. P14.70 d. P16.10 e. None of these; answer is 9. Refer to no. 7. Assuming that the regular sales price of the company is reduced to P19.00 resulting in a 10% increase in sales volume, the effect in the monthly contribution margin will be a. P20,400 decrease b. P20,400 increase c. P30,000 increase d. P33,000 increase e. None of these; answer is

7. The Yellow Company has the capacity to manufacture 20,000 units per month. However, present plans call for monthly production and sales of 15,000 units at P21.00 each. Costs per unit are as follows: Direct materials P7.00 Direct labor 4.20 Variable factory overhead Fixed factory overhead Variable marketing expenses Fixed administrative expenses 1.05 2.10 0.35 1.40 P16.10 Total Assume that Yellow Company accepted a special order of 5,000 units at P15.00 per unit, the decrease or increase in contribution margin shall amount to a. P5,500 decrease b. P12,000 decrease c. P12,000 increase d. P13,750 increase e. None of these; answer is 8. Refer to no. 7. The unit cost figure the company would use in costing inventory using direct costing is a. P12.25 b. P12.60 c. P14.70 d. P16.10 e. None of these; answer is 9. Refer to no. 7. Assuming that the regular sales price of the company is reduced to P19.00 resulting in a 10% increase in sales volume, the effect in the monthly contribution margin will be a. P20,400 decrease b. P20,400 increase c. P30,000 increase d. P33,000 increase e. None of these; answer is

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 39E

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Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?
A company produces two products. E and F in batches of 100 units. The production and cost data are: The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year? A. $216,000 B. $204,000 C. $12,000 D. $54,000
Patterson Corporation expects to incur 70,000 of factory overhead and 60,000 of general and administrative costs next year. Direct labor costs at 5 per hour are expected to total 50,000. If factory overhead is to be applied per direct labor hour, how much overhead will be applied to a job incurring 20 hours of direct labor? a. 120 b. 260 c. 28 d. 140
Bobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?
Company A wants to earn $5,000 profit in the month of January. If their fixed costs are $10,000 and their product has a per-unit contribution margin of $250, how many units must they sell to reach their target income? A.20 B. 40 C. 60 D. 120
Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the estimated cost driver of 240,000 direct labor hours. It manufactures three products and estimates these costs: If the labor rate is $25 per hour, what is the per-unit cost of each product?
Total Pops data show the following information: New machinery will be added in April. This machine will reduce the labor required per unit and increase the labor rate for those employees qualified to operate the machinery. Finished goods inventory is required to be 20% of the next months requirements. Direct material requires 2 pounds per unit at a cost of $3 per pound. The ending inventory required for direct materials is 15% of the next months needs. In January, the beginning inventory is 3,000 units of finished goods and 4,470 pounds of material. Prepare a production budget, direct materials budget, and direct labor budget for the first quarter of the year.
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.
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
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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?