Assume the same information for the Pacific Boat Company as in Problem 10-40 with one exception. This exception is that Pacific Boat uses a 90% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours in its assembling operations. (A 90% learning curve means b = -0.152004.) Q. Prepare a prediction of the total costs for producing the six PT109s for the Navy.

Assume the same information for the Pacific Boat Company as in Problem 10-40 with one exception. This exception is that Pacific Boat uses a 90% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours in its assembling operations. (A 90% learning curve means b = -0.152004.) Q. Prepare a prediction of the total costs for producing the six PT109s for the Navy.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 41P: Harriman Industries manufactures engines for the aerospace industry. It has completed manufacturing...

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Assume that at the beginning of 20x2, Cicleta trained the 2 assembly workers in a new approach that had the objective of increasing the efficiency of the assembly process. Cicleta also began moving toward a JIT purchasing and manufacturing system. When JIT is fully implemented, the demand for expediting is expected to be virtually eliminated. It is expected to take two to three years for full implementation. Assume that receiving cost is a step-fixed cost with steps of 1,500 orders. The other three activities employ resources that are acquired as used and needed. At the end of 20x2, the following results were reported for the four activities: Required: 1. Prepare a trend report that shows the non-value-added costs for each activity for 20x1 and 20x2 and the change in costs for the two periods. Discuss the reports implications. 2. Explain the role of activity reduction for receiving and for expediting. What is the expected value of SQ for each activity after JIT is fully implemented? 3. What if at the end of 20x2, the selling price of a competing product is reduced by 27 per unit? Assume that the firm produces and sells 20,000 units of its product and that its product is associated only with the four activities being considered. By virtue of the waste-reduction savings, can the competitors price reduction be matched without reducing the unit profit margin of the product that prevailed at the beginning of the year? If not, how much more waste reduction is needed to achieve this outcome? In this case, what price decision would you recommend?
Assume the same information for Northern Defense as in Exercise 10-33, except that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours. (An 85% learning curve means b = -0.234465.) Q. Calculate the total variable costs of producing 2, 3, and 4 units.
Sharon Glessing, controller for Janson Company, has noticed that the company faces a 80 percent learning rate for its specialty design line. In planning the cost of the latest design, Sharon assumed that the first set of units would take 1,100 direct labor hours. She decided to use this information in budgeting for the cost of the total project, which would involve the manufacture of 16 sets. Direct labor is paid $40 per hour. 1. Complete the table below showing results by row for total production of: one unit, two units, four units, eight units, and sixteen units. (Round hour answers to two significant digits.) (Round Cumulative Total Time answers to the nearest whole number.) 2. What is the total labor cost if Janson Company makes eight sets? Sixteen sets? (Use the rounded answers in the subsequent computations). 3. Using the logarithmic function, complete the table below showing results by row for each of unit sets one through eight. (Round hour answers to two significant digits.)…
10-36 Cost estimation, incremental unit-time learning model. Assume the same information for the Blue Seas Company as in Problem 10-35 with one exception. This exception is that Blue Seas uses a 90% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours in its assembling operations. (A 90% learning curve means b = −0.152004.) Prepare a prediction of the total costs for producing the six PT109s for the Navy. If you solved requirement 1 of Problem 10-35, compare your cost prediction there with the one you made here. Why are the predictions different? How should Blue Seas decide which model it should use?
The firm manufactures a product with the following costs: Direct materials→₱14.00; Direct labor→₱12.00; Variable manufacturing overhead→₱3.00; Fixed manufacturing overhead→₱1,500,000; Variable selling, general and administrative expenses→₱2.00; Fixed selling, general and administrative expenses→₱1,000,000. The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 80,000 units per year. The company has invested ₱500,000 in this product and expects a return on investment of 25%. Tax rate is 25%.
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The following information is provided to you: Time taken to produce first 8 shock pads 640 hours Time taken to produce first 16 shock pads 1200 hours Calculate the learning curve The following information is provided to you: Direct labour needed to make first machine. 1000 hoursLearning curve. 80%Direct labour cost. R300 per hourDirect materials cost. R180000 per machine Fixed cost for machines at each cumulative production R800000 Calculate the total direct hours required to manufacture four (4) machines. ( Indicate both average time per unit as well as cumulative time per unit for all theunits) Calculate the total costs to manufacture 4 machines
Based on the following information, complete the problems listed below on the Osprey Helicopters Company. Baseline Financial Results [In $ Dollars 000] Sales…………………..…………………………….$75,000 Basic Manufacturing Costs……………………$30,000 General & Administrative Expense………..$12,000 # Units shipped…………………………………...15 Your task is to create a set of pro-forma forecasts based on the following baseline assumptions on key business drivers and specific assumptions for each of the two scenarios. For the Baseline results shown above, the assumptions are (1) Basic Mfr. Costs and General & Administrative Expenses arising from the summary financial data above are treated as Fixed Costs, and (2) Contribution Margin Percentage is 60%. Helpful hint when doing scenario analysis: start by calculating the operating profit [and its underlying cost structure] arising from the information provided above. After doing this, then solve Scenarios 1 and 2. Scenario 1: Assume Osprey ships 20 helicopters…
A manufacturing company is about to start manufacturing a new product, the FX200 The management accountant has provided the following information about the unit cost of the FX200: Direct labour (3 hours @R10/hr) Indirect labour (2 hours @R9/hr) Direct material (4 kg @R5/kg) Indirect material R10 Direct expenses R4 Indirect production expenses R7 Selling and distribution overhead R5 For one unit of FX200, calculate the following: a).The prime cost b).The total production cost c).The full cost
ABC INC product is currently produced at 10 materials, 40 labor and 15 overhead. If automation is implemented, the product can be produced at 10 materials, 5 labor and 35 overhead. At a total of 10,000 units, what is the net incremental cost or benefit if the production decides to move into automation?
Please help me set this equation up. Kearney, Inc., makes kitchen tools. Company management believes that a new model of coffee grinder would sell well at a price of $66. The company estimates unit materials costs to be $16 for the model, and overhead costs would average $18 per unit. The local wage rate for direct labor is $28 per hour. Kearney has a goal of earning an operating profit of 20 percent of manufacturing costs for each of its products. Required: What direct labor-hour input (hours per unit) could Kearney allow and still achieve its profit goal?
Marshall Co. produced a pilot run of forty units of a recently developed piston used in one of its products. Marshall expected to produce and sell 1,930 units annually. The pilot run required an average of 0.55 direct labor hours per piston for 40 pistons. Marshall experienced an sixty percent learning curve on the direct labor hours needed to produce new pistons. Past experience indicated that learning tends to cease by the time 640 pistons are produced. Marshall's manufacturing costs for pistons are presented below. Direct labor $ 17.00 per direct labor hour Variable overhead 13.00 per direct labor hour Fixed overhead 10.00 per direct labor hour Materials 4.00 per unit Marshall received a quote of $10 per unit from Kytel Machine Co. for the additional 1,890 needed pistons. Marshall frequently subcontracts this type of work and has always been satisfied with the quality of the units produced by Kytel. If the pistons are manufactured by Marshall…