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Gormam, n the omam, Inc., a manufacturer of plastic products, reports the following manufactuning costs and account analysis classification or the year ended December 31, 2017 produced 70,000 units product in 2017. Gornam's management is estimating costs for 2018 on 2017 numbers. The following additional information is available for 2018. - X - X Data Table More Info a. Direct materials prices in 2018 are expected to increase by 8% compared with 2017. b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 4% in 2018 compared with 2017. c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018. d. Depreciation costs are expected to increase by 9%, and rent, property taxes, and administration costs are expected to increase by 8%. e. Gorham expects to manufacture and sell 80,000 units in 2018. Account Classification Amount Direct materials All variable s 367,500 Direct manufacturing labor All variable 297,500 Power All variable 87,500 Supervision labor 20% variable 70,000 Materials-handling labor 60% variable 35,000 Maintenance labor 40% variable 70,000 Depreciation 0% variable 94,000 Rent, property taxes, and administration 0% variable 110,000 Requirements Round ti 1. Prepare a schedule of variable, fixed, and total manufacturing costs for each account category in 2018. Estimate total manufacturing costs for 2018. Print Done 2. Calculate Gorham's total manufacturing cost per unit in 2017, and estimate total manufacturing cost per unit in 2018.

Gormam, n the omam, Inc., a manufacturer of plastic products, reports the following manufactuning costs and account analysis classification or the year ended December 31, 2017 produced 70,000 units product in 2017. Gornam's management is estimating costs for 2018 on 2017 numbers. The following additional information is available for 2018. - X - X Data Table More Info a. Direct materials prices in 2018 are expected to increase by 8% compared with 2017. b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 4% in 2018 compared with 2017. c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018. d. Depreciation costs are expected to increase by 9%, and rent, property taxes, and administration costs are expected to increase by 8%. e. Gorham expects to manufacture and sell 80,000 units in 2018. Account Classification Amount Direct materials All variable s 367,500 Direct manufacturing labor All variable 297,500 Power All variable 87,500 Supervision labor 20% variable 70,000 Materials-handling labor 60% variable 35,000 Maintenance labor 40% variable 70,000 Depreciation 0% variable 94,000 Rent, property taxes, and administration 0% variable 110,000 Requirements Round ti 1. Prepare a schedule of variable, fixed, and total manufacturing costs for each account category in 2018. Estimate total manufacturing costs for 2018. Print Done 2. Calculate Gorham's total manufacturing cost per unit in 2017, and estimate total manufacturing cost per unit in 2018.

Cornerstones of Cost Management (Cornerstones Series)
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 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
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Gorham, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2017. Gorham, Inc., produced 70,000 units of product in 2017. Gorham's management is estimating costs for 2018 on the basis of 2017 numbers. The following additional information is available for 2018. - X Data Table More Info Account Classification Amount a. Direct materials prices in 2018 are expected to increase by 8% compared with 2017. b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 4% in 2018 compared with 2017. Direct materials All variable $ 367,500 c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018. Direct manufacturing labor All variable 297,500 Power All variable 87,500 d. Depreciation costs are expected to increase by 9%, and rent, property taxes, and administration costs are expected to increase by 8%. e. Gorham expects to manufacture and sell 80,000 units in 2018. Supervision labor 20% variable 70,000 Materials-handling labor 60% variable 35,000 Maintenance labor 40% variable 70,000 Depreciation 0% variable 94,000 Rent, property taxes, and administration 0% variable 110,000 Requirements Round th 1. Prepare a schedule of variable, fixed, and total manufacturing costs for each account category in 2018. Estimate total manufacturing costs for 2018. Print Done 2. Calculate Gorham's total manufacturing cost per unit in 2017, and estimate total manufacturing cost per unit in 2018. Power 100,000 3. How can you obtain better estimates of fixed and variable costs? Why would these better estimates be useful to Gorham? 16.000 66 000
Transcribed Image Text:Gorham, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2017. Gorham, Inc., produced 70,000 units of product in 2017. Gorham's management is estimating costs for 2018 on the basis of 2017 numbers. The following additional information is available for 2018. - X Data Table More Info Account Classification Amount a. Direct materials prices in 2018 are expected to increase by 8% compared with 2017. b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 4% in 2018 compared with 2017. Direct materials All variable $ 367,500 c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018. Direct manufacturing labor All variable 297,500 Power All variable 87,500 d. Depreciation costs are expected to increase by 9%, and rent, property taxes, and administration costs are expected to increase by 8%. e. Gorham expects to manufacture and sell 80,000 units in 2018. Supervision labor 20% variable 70,000 Materials-handling labor 60% variable 35,000 Maintenance labor 40% variable 70,000 Depreciation 0% variable 94,000 Rent, property taxes, and administration 0% variable 110,000 Requirements Round th 1. Prepare a schedule of variable, fixed, and total manufacturing costs for each account category in 2018. Estimate total manufacturing costs for 2018. Print Done 2. Calculate Gorham's total manufacturing cost per unit in 2017, and estimate total manufacturing cost per unit in 2018. Power 100,000 3. How can you obtain better estimates of fixed and variable costs? Why would these better estimates be useful to Gorham? 16.000 66 000
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