a. Materials and labor for servicing machine tools b. Rework costs $1,100,000 90,000 c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment 65,000 80,000 45,000 55,000 75,000 Classify each cost as value-added, non-value-added, or in the gray area between. For any cost classified in the gray area, assume 60% is value-added and 40% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 1. Required 2. 3. Magill is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 40% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 20% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly.

a. Materials and labor for servicing machine tools b. Rework costs $1,100,000 90,000 c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment 65,000 80,000 45,000 55,000 75,000 Classify each cost as value-added, non-value-added, or in the gray area between. For any cost classified in the gray area, assume 60% is value-added and 40% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 1. Required 2. 3. Magill is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 40% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 20% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

See similar textbooks

Similar questions

Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases. a. Direct material cost per unit. b. Fees for using a patent of $500,000 plus $0.25 for each unit produced. c. Salary of quality control supervisor. d. Straight-line depreciation per unit on factory equipment. e. Total direct materials cost.
Classifying costs as factory overhead Which of the following items are properly classified as part of factory overhead for Caterpillar? a. Amortization of patents on new assembly process b.Consultant fees for a study of production line employee productivity C. Depreciation on Peoria. Illinois, headquarters building d.Factory supplies used in the Morganton. North Carolina, engine parts plant e.Interest expense on debt f. Plant manager's salary at Aurora, Illinois, manufacturing plant g.Properly taxes on the Danville, Kentucky, tractor tread plant h.Sales incentive fees to dealers i. Steel plate j. Vice president of finance's salary
For E2-17, prepare any journal entries that would have been different if the only trigger points had been the purchase of materials and the sale of finished goods. Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)
Activity-based costing in an insurance company Umbrella Insurance Company carries three major lines of insurance: auto, workers' compensation, and homeowners. The company has prepared the following report for 20Y2: Management is concerned that the administrative expenses may make some of the insurance lines unprofitable. However, the administrative expenses have not been allocated to the insurance lines. The controller has suggested that the administrative expenses could be assigned to the insurance lines using activity-based costing. The administrative expenses are comprised of five activities. The activities and their rates are as follows: Activity-base usage data for each line of insurance were retrieved from the corporate records and are shown below. a.Complete the product profitability report through the administrative activities. b.Determine the underwriting income as a percent of premium revenue. C.Determine the Operating income as a percent of premium revenue, rounded to one decimal place. d.Interpret the report.
Requirement 1. Classify each cost as value-added, non-value-added, or in the gray area between. a. Materials and labor for servicing machine tools b. Rework costs c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment Requirement 2. For any cost classified in the gray area, assume 96% is value-added and 4% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? Compute the total cost for the value-added and nonvalue-added costs, then compute what percentage of the total is value-added and how much is non-value-added. Total percent Total cost of total costs Value-added % Non-value-added % Total costs Requirement 3.…
Schedule of Activity Costs Quality Control Activities Activity Cost Process audits $50,400 Training of machine operators 26,300 Processing returned products 15,700 Scrap processing (disposal) 24,100 Rework 7,500 Preventative maintenance 28,800 Product design 44,900 Warranty work 9,400 Finished goods inspection 22,300 From the provided schedule of activity costs, determine the non-value-added costs. a.$114,500 b.$56,700 c.$229,400 d.$47,300
HELP WITH CORRECT ANSWER AND WORKING Schedule of Activity CostsQuality Control ActivitiesActivity CostProcess audits$48,200Training of machine operators27,000Processing returned products16,700Scrap processing (disposal)25,200Rework8,900Preventative maintenance28,100Product design43,800Warranty work6,900Finished goods inspection23,000 From the above schedule of activity costs, determine the total activity cost. a. $227,800 b. $99,000 c. $275,638 d. $149,700
E4-1 Classifying fixed and variable costs Classify each of the following items of factory overhead as either a fixed or a variable cost. (Include any costs that you consider to be semivariable within the variable category. Remember that variable costs change in total as the volume of production changes.) a. Indirect labor b. Indirect materials c. Insurance on building d. Overtime premium pay e. Depreciation of building (straight-line method) f. Polishing compounds g. Depreciation of machinery (units-of-production method) h. Employer’s payroll taxes i. Property taxes j. Machine lubricants k. Employees’ hospital insurance (paid by employer) l. Labor for machine repairs m. Vacation pay n. Janitor’s wages o. Rent p. Small tools q. Plant manager’s salary r. Factory electricity s. Product inspector’s wages
The amount of direct materials to be back-flushed to Finished Goods is: a. P5,076,000 c. P5,390,250 b. 5,100,000 d. P 5,414,250 The amount of conversion costs to be back-flushed to Finished Goods is: b. P39,750 a. P36,000 c. P75,750 d. P24,000
Journalize the following entires. Is FOH - machining over or under-applied? Is FOH - Assembly over or under-applied? (a) Materials purchased on account, $80,000 (b)Depreciation expenses: Machining, $2,000; Assembly, $5,000 (c)Materials requisitioned by: Machining, $4,000 direct and $1,000 indirect materials; Assembly, $3,000 indirect materials (d)Factory overhead applied: Machining, $2,500; Assembly, $8,400 (e)Direct labor used by Machining, $7,500; Assembly, $1,500 (f)Machining Department transferred $5,000 to Assembly Department; Assembly Department transferred $3,200 to finished goods (g)Sold goods on account, $6,000; cost of goods sold, $2,000
Classification of Costs The following are the costs incurred by a printing company:1. Print machine setup costs2. Cost of complexity due to the number and variety of products3. Costs to train new printing staff in the use and safety features of the equipment4. Ink5. Customer service costs6. Paper7. Redesign of the print process to improve efficiency8. Machine operation labor9. Order taking10. Purchasing and stocking paper and other suppliesRequired1. Identify the above costs as (a) activity-based costs, (b) volume-based costs, (c) structural costs, or(d) executional costs.2. Identify each cost as either a product cost or a period cost.3. Identify which, if any, of these costs has a potential harmful environmental impacT
The Multicolors Company had the following costs for 2021: Raw materials P 2,1000,000 Direct labor 300,000 Miscellaneous FOH (fixed) 240,000 Depreciation of machines 120,000 Rent for factory building 150,000 Rent for sales office 90,000 Depreciation on store equipment 60,000 How much of these costs should be considered product or manufacturing costs to be inventoried under absorption costing? Group of answer choices P 3,060,000 P 3,000,000 P 2,910,000 P 2,790,000