Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar. Toys produced 88,400 109,200 142,800 Total costs: Total variable costs $33,592 d. j. $ Total fixed costs 37,128 е. k. Total costs $70,720 f. $ 1. $ Cost per unit: Variable cost per unit a. $ g. $ m. Fixed cost per unit b. h. n. Total cost per unit C. $ i. $ 0. $
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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?Product Mix Decision, Single Constraint Sealing Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of 15,000 hours per year. Information on the three types of storage units is as follows: Sealings marketing director has assessed demand for the three types of storage units and believes that the firm can sell as many units as it can produce. Required: 1. How many of each type of unit should be produced and sold to maximize the companys contribution margin? What is the total contribution margin for your selection? 2. Now suppose that Sealing Company believes that it can sell no more than 12,000 of the deluxe model but up to 50,000 each of the basic and standard models at the selling prices estimated. What product mix would you recommend, and what would be the total contribution margin?Activity-Based Supplier Costing Levy Inc. manufactures tractors for agricultural usage. Levy purchases the engines needed for its tractors from two sources: Johnson Engines and Watson Company. The Johnson engine has a price of 1,000. The Watson engine is 900 per unit. Levy produces and sells 22,000 tractors. Of the 22,000 engines needed for the tractors, 4,000 are purchased from Johnson Engines, and 18,000 are purchased from Watson Company. The production manager, Jamie Murray, prefers the Johnson engine. However, Jan Booth, purchasing manager, maintains that the price difference is too great to buy more than the 4,000 units currently purchased. Booth also wants to maintain a significant connection with the Johnson source just in case the less expensive source cannot supply the needed quantities. Jamie, however, is convinced that the quality of the Johnson engine is worth the price difference. Frank Wallace, the controller, has decided to use activity costing to resolve the issue. The following activity cost and supplier data have been collected: Required: 1. CONCEPTUAL CONNECTION Calculate the activity-based supplier cost per engine (acquisition cost plus supplier-related activity costs). (Round to the nearest cent.) Which of the two suppliers is the low-cost supplier? Explain why this is a better measure of engine cost than the usual purchase costs assigned to the engines. 2. CONCEPTUAL CONNECTION Consider the supplier cost information obtained in Requirement 1. Suppose further that Johnson can only supply a total of 20,000 units. What actions would you advise Levy to undertake with its suppliers?
- Step Costs, Relevant Range Bellati Inc. produces large industrial machinery. Bellati has a machining department and a group of direct laborers called machinists. Each machinist can machine up to 500 units per year. Bellati also hires supervisors to develop machine specification plans and oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee, at most, three machinists. Bellatis accounting and production history shows the following relationships between number of units produced and the annual costs of supervision and materials handling (by machinists): Required: 1. Prepare a graph that illustrates the relationship between direct labor cost and number of units produced in the machining department. (Let cost of direct labor be the vertical axis and number of units be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 2. Prepare a graph that illustrates the relationship between the cost of supervision and the number of units produced. (Let cost of supervision be the vertical axis and number of units be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 3. Suppose that the normal range of production is between 1,400 and 1,500 units and that the exact number of machinists is currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 500 units. What is the increase in the cost of direct labor? Cost of supervision?Functional-Based versus Activity-Based Costing For years, Tamarindo Company produced only one product: backpacks. Recently, Tamarindo added a line of duffel bags. With this addition, the company began assigning overhead costs by using departmental rates. (Prior to this, the company used a predetermined plantwide rate based on units produced.) Surprisingly, after the addition of the duffel-bag line and the switch to departmental rates, the costs to produce the backpacks increased, and their profitability dropped. Josie, the marketing manager, and Steve, the production manager, both complained about the increase in the production cost of backpacks. Josie was concerned because the increase in unit costs led to pressure to increase the unit price of backpacks. She was resisting this pressure because she was certain that the increase would harm the companys market share. Steve was receiving pressure to cut costs also, yet he was convinced that nothing different was being done in the way the backpacks were produced. After some discussion, the two managers decided that the problem had to be connected to the addition of the duffel-bag line. Upon investigation, they were informed that the only real change in product-costing procedures was in the way overhead costs are assigned. A two-stage procedure was now in use. First, overhead costs are assigned to the two producing departments, Patterns and Finishing. Second, the costs accumulated in the producing departments are assigned to the two products by using direct labor hours as a driver (the rate in each department is based on direct labor hours). The managers were assured that great care was taken to associate overhead costs with individual products. So that they could construct their own example of overhead cost assignment, the controller provided them with the information necessary to show how accounting costs are assigned to products: The controller remarked that the cost of operating the accounting department had doubled with the addition of the new product line. The increase came because of the need to process additional transactions, which had also doubled in number. During the first year of producing duffel bags, the company produced and sold 100,000 backpacks and 25,000 duffel bags. The 100,000 backpacks matched the prior years output for that product. Required: (Note: Round rates and unit cost to the nearest cent.) 1. CONCEPTUAL CONNECTION Compute the amount of accounting cost assigned to a backpack before the duffel-bag line was added by using a plantwide rate approach based on units produced. Is this assignment accurate? Explain. 2. Suppose that the company decided to assign the accounting costs directly to the product lines by using the number of transactions as the activity driver. What is the accounting cost per unit of backpacks? Per unit of duffel bags? 3. Compute the amount of accounting cost assigned to each backpack and duffel bag by using departmental rates based on direct labor hours. 4. CONCEPTUAL CONNECTION Which way of assigning overhead does the best jobthe functional-based approach by using departmental rates or the activity-based approach by using transactions processed for each product? Explain. Discuss the value of ABC before the duffel-bag line was added.Young Company is beginning operations and is considering three alternatives to allocate manufacturing overhead to individual units produced. Young can use a plantwide rate, departmental rates, or activity-based costing. Young will produce many types of products in its single plant, and not all products will be processed through all departments. In which one of the following independent situations would reported net income for the first year be the same regardless of which overhead allocation method had been selected? a. All production costs approach those costs that were budgeted. b. The sales mix does not vary from the mix that was budgeted. c. All manufacturing overhead is a fixed cost. d. All ending inventory balances are zero.
- Product Mix Decision, Single Constraint Norton Company produces two products (Juno and Hera) that use the same material input. Juno uses two pounds of the material for every unit produced, and Hera uses five pounds. Currently, Norton has 16,000 pounds of the material in inventory. All of the material is imported. For the coming year, Norton plans to import an additional 8,000 pounds to produce 2,000 units of Juno and 4,000 units of Hera. The unit contribution margin is 30 for Juno and 60 for Hera. Also, assume that Nortons marketing department estimates that the company can sell a maximum of 2,000 units of Juno and 4,000 units of Hera. Norton has received word that the source of the material has been shut down by embargo. Consequently, the company will not be able to import the 8,000 pounds it planned to use in the coming years production. There is no other source of the material. Required: 1. Compute the total contribution margin that the company would earn if it could manufacture 2,000 units of Juno and 4,000 units of Hera. 2. Determine the optimal usage of the companys inventory of 16,000 pounds of the material. Compute the total contribution margin for the product mix that you recommend.Relevant range and fixed and variable costsVogel Inc. manufactures memory chips for electronic toys within arelevant range of 45,000 to 75,000 memory chips per year. Within this range, the following partially completedManufacturing cost schedule has been prepared Complete the cost schedule, identifying each cost by the appropriateletter (a) through (o).Relevant range and fixed and variable costsChild Play Inc. manufactures electronic toys within a relevant range of 20,000 to 150,000 toys per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Complete the cost schedule, identifying each cost by the appropriate letter (a) through (o)
- Relevant Range and Costs that tend to remain the same in amount, regardless of variations in the level of activity.Fixed and Costs that vary in total dollar amount as the level of activity changes.Variable Costs Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 100,800 to 165,600 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 100,800 128,800 165,600 Total costs: Total variable costs . . . . . . . . . $41,328 (d) (j) Total fixed costs . . . . . . . . . . . . 46,368 (e) (k) Total costs . . . . . . . . . . . . . . . . . $87,696 (f) (l) Cost per unit: Variable cost per unit . . . . . . . (a) (g) (m) Fixed cost per unit . . . . . . . . . . (b) (h) (n) Total cost per unit . . . . . . . . . . (c) (i) (o) Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round…Q) Child Play Inc. manufactures electronic toys within the relevant range of $20000 to 150,000 toys per year. Within this range, the following partially completed manufacturing costs schedule has been prepared. Toys produced 40000 80000 120000 Total costs: Total variable costs 720000 D J Total fixed costs 600000 E K Total costs 1320,000 F L Total costs per unit A G M Fixed costs per unit B h N Total costs per unit C I O Complete the costs schedule, identifying each cost by the appropriate letter (a) through (o). B) What kind of a firm would use job costing method? Q2) The company Grayson manufacturer uses a job order costing method. The following date summarizes the operations related to the production for the January for the first month of operations. Purchased 400 units of materials at $14 per unit on account. Requisitioned materials for the production for as following 200 units for…Relevant Range and Fixed and Variable Costs Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 100,800 to 165,600 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 100,800 128,800 165,600 Total costs: Total variable costs . . . . . . . . . $41,328 (d) (j) Total fixed costs . . . . . . . . . . . . 46,368 (e) (k) Total costs . . . . . . . . . . . . . . . . . $87,696 (f) (l) Cost per unit: Variable cost per unit . . . . . . . (a) (g) (m) Fixed cost per unit . . . . . . . . . . (b) (h) (n) Total cost per unit . . . . . . . . . . (c) (i) (o) Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar. Cost Report Components produced 100,800 128,800 165,600 Total costs: Total variable costs…