A Company makes plastic dog carriers. The manufacturing process is highly automated and the machine time needed to make any size crate is approximately the same. A’s management decides to begin producing plastic lawn furniture and, to do so, two additional pieces of automated equipment are acquired. Annual depreciation on the new pieces of equipment is P38,000. Should the new overhead cost be allocated over all products manufactured by A? Explain
Q: Hanson, Inc. makes 1,000 units per year of a part called a prositron for use in one of its products.…
A: When business is manufacturing some product and same product can also be purchased from outside…
Q: Assume a (hypothetical) company, Troff erini S. A., incurred the following expendituresto purchase a…
A: While acquiring a Property plant and Equipment, costs which are necessary to bring the asset in…
Q: Voiture Company manufactures compact, energy-efficient cars. On April 1, it purchased a machine for…
A: Financial statements that describe the operations and financial performance of a company. Financial…
Q: A mechanical engineer is considering two robots for improving materials handling in the production…
A: Capital budgeting refers to the evaluation of the profitability of potential investment and projects…
Q: Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens…
A: Answer:
Q: Garcia Company has 11,500 units of its product that were produced at a cost of $172,500. The units…
A: In decision-making questions of Scrap or Rework analysis, the decision will be made on the basis of…
Q: Steve Hausmann, a production engineer at Euro Fashion-USA, a European-style furniture company, was…
A: The current truck is completely depreciated but has a market value of $7,500 in the market
Q: International Fabric, Inc. must decide which type of fabric cutting machines it will use - Machine A…
A: we will find the equated annual cost of both machinery A and B and will select the machinery which…
Q: Foster has built a new factory incurring the following costs: Land GH₵1,200,000 Materials…
A: All expense Which are essential for construction of factory should be capitalized like Land ,…
Q: Guava Company, a major winery, started a construction of a new facility in Mindanao. The following…
A: At the time of startup of business, some costs, needs to be capitalized and some costs needs to be…
Q: Foster has built a new factory incurring the following costs: $'000 Land 1,200 Materials 2,400…
A: We have the following information:
Q: Monroe Manufacturing owns a warehouse that has been used for storing finished goods for electro-pump…
A: Capital Budgeting decisions are related to long-term investment made by the company in selection of…
Q: A mechanical engineer designs and sells equipment that automates manual labor processes. He is…
A: First cost = $ 176000 Estimated operating cost = $ 43000 Useful life = 5 years Extended years = 2…
Q: acturing firm is making auto parts. The machine operators do the packaging and fill the shipping…
A: Present worth is present value of benefits after deductions of initial cost and expenses.
Q: The cost of equipment to apply epoxy paint to a warehouse floor is $1400. Materials and supplies…
A: No of square feet that justify the equipment purchase be x.
Q: Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an…
A: Special order decisions: Special order decisions include circumstances in which the board must…
Q: It is planning to reduce its labor costs by automating a critical task that is currently performed…
A: Present value means the actual amount is adjusted with the interest rate so as to get the present…
Q: Eight years ago, Ohio Valley Trucking purchased a large-capacity dump truck for $110,000 to provide…
A: Purchase price of truck is $110,000 Time period 8 years Per year maintainance cost is $12,200 Resale…
Q: Prior to install a JIT system, Buckner Company, a producer of automobile parts, used maintenance…
A: A predefined overhead rate is an allocation rate that is applied to cost items for a specified…
Q: Meltzer Corporation is presently making part 013 that is used in one of its products. A total of…
A: Introduction: A transfer cost is an amount paid by one split of a corporation to another division of…
Q: Zachary Company makes and sells lawn mowers for which it currently makes the engines. It has an…
A: If Zackary Company buys the engines from the manufacturer, Cost of Material Cost of Labor…
Q: Barron Chemical uses a thermoplastic polymer to enhance the appearance of certain RV panels. The…
A: A discount rate at which the net present worth of an investment is equal to zero is term as internal…
Q: Jackson Inc. disposes of other companies’ toxic waste. Currently, Jackson loads the waste by…
A: Given is: Cost of Machine = $200,000 Reduction in Labour Cost = $5 per load Loads in a year = 10000
Q: Harold Manufacturing produces denim clothing. This year, it produced 5,000 denim jackets at a…
A: Incremental income: It is the income generated from additional sales. The income is calculated by…
Q: Barron Chemical used a thermoplastic polymer to enhance the appearance of certain RV panels. The…
A: A discount rate at which the net present worth of an investment is equal to zero is term as internal…
Q: McDonald (Agricultural Engineers) Ltd recently built a machine for a farmer at a cost of £22,000.…
A: Minimum price is the amount of total cost of replacing the component, total labour cost for setup…
Q: An automobile manufacturer is considering a change in an assembly line that should save moneyby…
A:
Q: Boom has damaged materials of 2,000 units with cost of 200,000. If rework, additional cost is 20,000…
A: Cost of goods sold is the total of all direct Cost of producing the goods sold by a company like…
Q: Barron Chemical uses a thermoplastic polymer to enhance the appearance of certain RV panels. The…
A: Rate of return = IRR = the rate at which NPV is nil. The cash flows are: Year Costs Revenues…
Q: Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports…
A: The Make or buy choice is the demonstration of settling on a vital decision between delivering a…
Q: which option is advantageous and by how much
A: Purchase price per unit P320 Fixed manufacturing overhead per unit P130 Total cost of buying the…
Q: BolaBola uses different kinds of machines in its manufacturing process. The following information…
A: There are two type of expenses which are being incurred by the business. One type of expenses needs…
Q: Linda’s Chocolate Factory decided to expand its business and bought a new machine on 1 January 2021…
A: Depreciation Expenses There are different method which are used to calculate the depreciation cost…
Q: A mechanical engineer who designs and sells equipment that automates manual labor processes is…
A: Workings: First cost = $ 170000 Estimated operating cost = $ 54000 Useful life = 5 years Extended…
Q: Dahl Corporation has just built a machine to produce car doors. Dahl had to build this machine…
A: The correct answer is Option (c)
Q: On 1 June 20X1, Galaxy Co. purchased a new machine for use in its factory. The directors have…
A: Along with purchase price following cost is also capitalised with the cost of Property Plant &…
Q: Barron Chemical uses a thermoplastic polymer to enhance the appearance of certain RV panels. The…
A: Rate of return is IRR of the project
Q: Zachary Company makes and sells lawn mowers for which it currently makes the engines. It has an…
A: The maximum price per unit that Zachary would be willing to pay for the engines would not include…
Q: A mechanical engineer designs and sells equipment that automates manual labor processes. He is…
A: The defender is the old equipment or product currently used by the company and might use for more…
Q: Mountain Gear has been using the same machines to make its name-brand clothing for the last five…
A: Machines are generally replaced for various reasons, the machine gets obsolete due to advancement in…
Q: Ellison Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in…
A: Calculate present value of each vendors:
Q: Fanning Company makes and sells lawn mowers for which it currently makes the engines. It has an…
A: The maximum price one can be willing to pay will only the relevant cost to manufacture engines on…
Q: Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $440,000. Shipping…
A: Total cost of the equipment = Cost of Purchase + Shipping costs + Foundation work + Testing expense
Q: Part U16 is used by McVean Corporation to make one of its products. A total of 13,000 units of this…
A: Relevant cost per unit of making the product = Direct materials + Direct labor + Variable…
A Company makes plastic dog carriers. The manufacturing process is highly automated and the machine time needed to make any size crate is approximately the same. A’s management decides to begin producing plastic lawn furniture and, to do so, two additional pieces of automated equipment are acquired. Annual
Should the new overhead cost be allocated over all products manufactured by A? Explain.
Step by step
Solved in 2 steps
- Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)Regal Executive, Inc., produces executive motor coaches and currently manufactures the cent awnings that accompany them at these costs: The company received an offer from Saied Tents to produce the awnings for $3,200 per unit and supply 1,000 awnings for the coming years estimated production. If the company accepts this offer and shuts down production of this part of the business, production workers and supervisors will be reassigned to other areas. Assume that for the short-term decision-making process demonstrated in this problem, the companys total labor costs (direct labor and supervisor salaries) will remain the same if the bar inserts are purchased. The specialized equipment cannot be used and has no market value. However, the space occupied by the awning production can be used by a different production group that will lease it for $60,000 per year. Should the company make or buy the awnings?The activity of moving materials uses four forklifts, each leased for 18,000 per year. A forklift is capable of making 5,000 moves per year, where a move is defined as a round trip from the plant to the warehouse and back. During the year, a total of 18,000 moves were made. What is the cost of the unused capacity for the moving goods activity? a. 5,400 b. 1,800 c. 7,200 d. 3,600
- Otero Fibers, Inc., specializes in the manufacture of synthetic fibers that the company uses in many products such as blankets, coats, and uniforms for police and firefighters. Otero has been in business since 1985 and has been profitable every year since 1993. The company uses a standard cost system and applies overhead on the basis of direct labor hours. Otero has recently received a request to bid on the manufacture of 800,000 blankets scheduled for delivery to several military bases. The bid must be stated at full cost per unit plus a return on full cost of no more than 10 percent after income taxes. Full cost has been defined as including all variable costs of manufacturing the product, a reasonable amount of fixed overhead, and reasonable incremental administrative costs associated with the manufacture and sale of the product. The contractor has indicated that bids in excess of 30 per blanket are not likely to be considered. In order to prepare the bid for the 800,000 blankets, Andrea Lightner, cost accountant, has gathered the following information about the costs associated with the production of the blankets. Direct machine costs consist of items such as special lubricants, replacement of needles used in stitching, and maintenance costs. These costs are not included in the normal overhead rates. Otero recently developed a new blanket fiber at a cost of 750,000. In an effort to recover this cost, Otero has instituted a policy of adding a 0.50 fee to the cost of each blanket using the new fiber. To date, the company has recovered 125,000. Lightner knows that this fee does not fit within the definition of full cost, as it is not a cost of manufacturing the product. Required: 1. Calculate the minimum price per blanket that Otero Fibers could bid without reducing the companys operating income. 2. Using the full-cost criteria and the maximum allowable return specified, calculate Otero Fibers bid price per blanket. 3. Without prejudice to your answer to Requirement 2, assume that the price per blanket that Otero Fibers calculated using the cost-plus criteria specified is greater than the maximum bid of 30 per blanket allowed. Discuss the factors that Otero Fibers should consider before deciding whether or not to submit a bid at the maximum acceptable price of 30 per blanket. (CMA adapted)Classify Costs Following is a list of various costs incurred in producing replacement automobile parts. With respect to the production and sale of these auto parts, classify each cost as either variable, fixed, or mixed. 1. Oil used in manufacturing equipment 2. Plastic 3. Property taxes, 165,000 per year on factory building and equipment 4. Salary of plant manager 5. Cost of labor for hourly workers 6. Packaging 7. Factory cleaning costs, 6,000 per month 8. Metal 9. Rent on warehouse, 10,000 per month plus 25 per square foot of storage used 10. Property insurance premiums, 3,600 per month plus 0.01 for each dollar of property over 1,200,000 11. Straight-line depreciation on the production equipment 12. Hourly wages of machine operators 13. Electricity costs, 0.20 per kilowatt-hour 14. Computer chip (purchased from a vendor) 15. Pension cost, 1.00 per employee hour on the jobZZOOM, Inc., has decided to discontinue manufacturing its Z Best model. Currently, the company has 4,600 partially completed Z Best models on hand. The government has put a recall on a particular part in the Z Best model, so each base model must now be reworked to accommodate the style of the new part. The company has spent $110 per unit to manufacture these Z Best models to their current state. Reworking each Z Best model will cost $22 for materials and $25 for direct labor. In addition, $9 of variable overhead and $34 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be allocated per unit. If ZZOOM completes the Z Best models, it can sell them for $180 per unit. On the other hand, another manufacturer is interested in purchasing the partially completed units for $105 each and converting them into Z Plus models. Prepare a differential analysis per unit to determine if ZZOOM should complete the Z Best models or sell them in their current state.
- Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from 35,000 to 200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time front planning and supervisory personnel, as well as that of some of the companys officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled Asset Construction Account. An analysis of the charges to this account as of December 31, 2019, follows: Olson allocates factory overhead to normal production as a percent of direct labor dollars as follows: Olson uses a flat rate of 40% of direct labor dollars to allocate general and administrative overhead. During the machine testing period, a cutter head malfunctioned and did extensive damage to the machine table and one cutter housing. This damage was not anticipated and was the result of an error in the assembly operation. Although no additional raw materials were needed to make the machine operational after the accident, the following labor for rework was required: Olson has included all these labor charges in the asset construction account. In addition, it included in the account the repairs and maintenance charges of 1,340 that it incurred as a result of the malfunction. Required: 1. Compute, consistent with GAAP and common practice, the amount that Olson should capitalize for the milling machine as of December 31, 2019, when it declares the machine operational. 2. Next Level Identify the costs you included in Requirement 1 for which there are acceptable alternative procedures. Describe the alternative procedure(s) in each case.Boston Executive. Inc., produces executive limousines and currently manufactures the mini-bar inset at these costs: The company received an offer from Elite Mini-Bars to produce the insets for $2,100 per Unit and supply 1,000 mini-bars for the coming years estimated production. If the company accepts this offer and shuts down production of this part of the business, production workers and supervisors will be reassigned to other areas. Assume that for the short-term decision-making process demonstrated in this problem, the companys total labor costs (direct labor and supervisor salaries) will remain the same if the bar inserts are purchased. The specialized equipment cannot be used and has no market value. However, the space occupied by the mini bar production can be used by a different production group that will lease it for $55,000 per year. Should the company make or buy the mini-bar insert?Roper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs. Wood used to produce desks ($125,00 per desk) Production labor used to produce desks ($15 per hour) Production supervisor salary ($45,000 per year) Depreciation on factory equipment ($60,000 per year) Selling and administrative expenses ($45,000 per year) Rent on corporate office ($44,000 per year) Nails, glue, and other materials required to produce desks (varies per desk) Utilities expenses for production facility Sales staff commission (5% of gross sales)
- Walloon Company produced 150 defective units last month at a unit manufacturing cost of 30. The defective units were discovered before leaving the plant. Walloon can sell them as is for 20 or can rework them at a cost of 15 and sell them at the regular price of 50. What is the total relevant cost of reworking the defective units? a. 2,250 b. 3,000 c. 4,500 d. 6,750Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory; in other words, a cleaning is started and completed on the same day. Required: 1. Prepare a statement of services produced in good form. 2. What if HHH planned to purchase 30,000 of direct materials? Assume there would be no change in beginning and ending inventories of materials. Explain which line items on the statement of services produced would be affected and how (increase or decrease).Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory and no finished goods inventory; in other words, a cleaning is started and completed on the same day. HHH expects to sell 15,000 cleanings at a price of 45 each next year. Total selling expense is projected at 22,000, and total administrative expense is projected at 53,000. Required: 1. Prepare an income statement in good form. 2. What if Jean and Tom increased the price to 50 per cleaning and no other information was affected? Explain which line items in the income statement would be affected and how.
