Assume that a value stream in Kendall Company has two products (Product 1 and Product 2) with material costs of $60,000 (Product 1) and $240,000 (Product 2) for a given week. The conversion costs for the week amounted to $300,000. There were 4,000 units of Product 1 that were produced and shipped to customers. For the second product, 8,000 units were produced and shipped. Product 1 has a cycle time of 0.5 hours, and Product 2 has a cycle time of 1 hour. The net production hours for the stream totaled 10,000 hours. Calculate the total value-stream cost per unit for Product 2 using duration-based costing (DBC). (Note: Round calculations to two decimal places.) Oa. 130.00 per unit Ob. $60.00 per unit Oc. $40.00 per unit Od. $55.00 per unit

Assume that a value stream in Kendall Company has two products (Product 1 and Product 2) with material costs of $60,000 (Product 1) and $240,000 (Product 2) for a given week. The conversion costs for the week amounted to $300,000. There were 4,000 units of Product 1 that were produced and shipped to customers. For the second product, 8,000 units were produced and shipped. Product 1 has a cycle time of 0.5 hours, and Product 2 has a cycle time of 1 hour. The net production hours for the stream totaled 10,000 hours. Calculate the total value-stream cost per unit for Product 2 using duration-based costing (DBC). (Note: Round calculations to two decimal places.) Oa. 130.00 per unit Ob. $60.00 per unit Oc. $40.00 per unit Od. $55.00 per unit

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 13E: Wyandotte Company provided the following information for the last calendar year: During the year,...

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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
During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine tools: 1,500 units of Tool SK1 and 2,500 units of Tool SK3. The cycle time for SK1 is 0.73 hour, and the cycle time for SK3 is 0.56 hour. The following costs 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 Tool SK1 is responsible for 60% of the materials cost. Calculate the unit cost for Tool SK 1 and Tool SK3, 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.
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