Assembly and Testing Average labor time per unit (hours) 300 150 Cumulative production 8 12 in units
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Weathereye, Inc. manufactures weather satellites. The final assembly and testing of the satellites is a largely manual operation involving dozens of highly trained electronics technicians. The following learning curve has been estimated for the firm’s newest satellite model, which is about to enter production.
Required:
1. What will be the average labor time required to assemble and test each satellite when the company has produced four satellites? Eight satellites?
2. What will be the total labor time required to assemble and test all satellites produced if the firm manufactures only four satellites? Eight satellites?
3. How can the learning curve be used in the company’s budgeting process? In setting cost standards?
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- Product Volume Material costper unit (R)Direct LabourCost per unit(R)Machine Timeper unit(Hours)Rubber Ball 1 000 5.00 5.50 0.35Leather Ball 700 20.00 2.00 1.00Total production Overheads are as follows:Machine department: R50 000 (machine hours is the cost driver)Set‐up costs: R5 000Ordering Costs‐materials: R2 000Handling materials: R8 000An analysis of production overhead activities for the period for the volume ofproducts manufactured revealed the following:Product # set‐ups # material orders # times material were handledRubber Ball 1 1 2Leather Ball 2 1 3Calculate the total budgeted product cost per unit for the Rubber Ball usingActivity Based Costing (ABC). Round all answers to two decimal places.Neelopak Berhad prepared the standard cost data for one of their products.Direct Labour (0.65 hours @ RM11) RM7.15Direct Materials (5 meters @ RM5) RM25Variable Overhead (0.65 hours @ RM7) RM4.55Fixed Overhead (0.65 hours @ RM3) RM1.95Standard cost per unit RM38.65There is the actual cost data information:Production 7,500 unitDirect materials used (23500 meter) RM124,550Direct materials purchasing (24,000 meter) RM132,000Direct labor (3000 hours) RM34,500Variable overhead RM21,600Fixed overhead RM7,800Budgeted activities are 2,600 hours.You are required to calculate:i) Variance of direct materials priceii) Variance of direct materials usediii) Variance of direct labor charge rateiv) Variance of direct labors’ efficiencyv) Variance of variable overhead expensesvi) Variance of variable overhead’s efficiencyvii) Variance of fixed overhead expensesviii) Variance of fixed overhead volumeNeelopak Berhad prepared the standard cost data for one of their products.Direct Labour (0.65 hours @ RM11) RM7.15Direct Materials (5 meters @ RM5) RM25Variable Overhead (0.65 hours @ RM7) RM4.55Fixed Overhead (0.65 hours @ RM3) RM1.95Standard cost per unit RM38.65There is the actual cost data information:Production 7,500 unitDirect materials used (23500 meter) RM124,550Direct materials purchasing (24,000 meter) RM132,000Direct labor (3000 hours) RM34,500Variable overhead RM21,600Fixed overhead RM7,800Budgeted activities are 2,600 hours.You are required to calculate:vii) Variance of fixed overhead expensesviii) Variance of fixed overhead volume
- Neelopak Berhad prepared the standard cost data for one of their products.Direct Labour (0.65 hours @ RM11) RM7.15Direct Materials (5 meters @ RM5) RM25Variable Overhead (0.65 hours @ RM7) RM4.55Fixed Overhead (0.65 hours @ RM3) RM1.95Standard cost per unit RM38.65There is the actual cost data information:Production 7,500 unitDirect materials used (23500 meter) RM124,550Direct materials purchasing (24,000 meter) RM132,000Direct labor (3000 hours) RM34,500Variable overhead RM21,600Fixed overhead RM7,800Budgeted activities are 2,600 hours.You are required to calculate:iv) Variance of direct labors’ efficiencyv) Variance of variable overhead expensesvi) Variance of variable overhead’s efficiencyvii) Variance of fixed overhead expensesviii) Variance of fixed overhead volumeQuetion: Calculate the required total labor hours, if there are 5,000 units produced and 2.5 units are produced per labor.Integrity Company uses standard costing for each specialized product. The following information is available: Standards: Material- 3.0 feet per unit @ P42.00 per foot Labor- 2.5 hours per unit @ P75.00 per hour Actual: Production- 2,750 units produced during the month Material- 8,700 feet used; 9,000 feet purchased @ P45.00 per foot Labor- 7,000 direct labor hours @ P79.00 per hour How much is the amount of direct materials debited to Work in Process Inventory?
- A department had the following information for the month: Total materials costs P45,000 Conversion cost per unit P3.00 Total manufacturing cost per unit P5.50 What are the equivalent units of production for materials?ABC Company makes a single product which has the following standards: Direct materials 2 kilograms $4.30 per kilogram Direct labor 3 hours $6.00 per hour Variable overhead 3 hours $6.50 per hour Fixed overhead 3 hours $9.00 per hourBonita’s standard quantities for 1 unit of product include 3 pounds of materials and 1.0 labor hours. The standard rates are $5 per pound and $5 per hour. The standard overhead rate is $6 per direct labor hour. The total standard cost per unit of Bonita’s product is a. $26.00. b. $11.00. c. $16.00. d. $20.00.
- Two products, A and B, are made using similar equipment and methods. The data for last periodare:Product A Product BUnits produced 6 000 8 000Labour hours per unit 1 2Machine hours per unit 4 2Set-ups in period 15 45Orders handled in the period 12 60Overheads for Period $Relating to production set-up 179 000Relating to order handling 30 000Relating to machine activity 55 000 264 000A. Calculate the overheads to be absorbed per unit of each product, based on:i. absorption costing using labour hour absorption rate. ii. an ABC approach using suitable cost drivers. B. Give TWO (2) advantages and TWO (2) disadvantages of the ABC System.Bramble Company has the following equivalent units of production for July: materials 20000 and conversion costs 15000. Production cost data are: Materials Conversion Work in process inventory, July 1 $ 5000 $ 3000 Costs added in July 53600 42000 The unit production costs for July are: Materials Conversion Costs $2.68 $2.80 $2.93 $3.00 $2.93 $2.80 $2.68 $3.00Required information [The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) $ 20.00 Direct labor (1.7 hrs. @ $11.00 per hr.) 18.70 Overhead (1.7 hrs. @ $18.50 per hr.) 31.45 Total standard cost $ 70.15 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs $ 135,000 Fixed overhead costs Depreciation—Building 24,000 Depreciation—Machinery 72,000 Taxes and insurance…