Looking for cost savings in administrative areas, the vice-president for human resources at McMahon Corporation asked his assistant to collect data on the employee cafeterias in the four McMahon locations around the country. After two days, the assistant returned with the following data for the previous year. Mobile Pecos Spokane Lansing Labor-hours 35,500 58,800 24,100 6,000 Meals served 111,000 217,000 77,000 13,300 Required: a. Compute the partial productivity measures for labor for the four locations. (Round your answers to 3 decimal places.)
Q: Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and…
A: Corporate profit is the money left over by a corporation after paying all of its expenses. All…
Q: In their efforts to plan for production, the Operations Planning Group at the Akon Manufacturing…
A: The following calculations are done for Akon Manufacturing Company.
Q: Herrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets…
A: Flexible Budget cost of catering supplies = Fixed costs + Cost associates with No. of Job + Cost…
Q: Handbrain Inc. is considering a change to activity-based product costing. The company produces two…
A: Solution a: Estimated Indirect labor 592800 /Estimated Dierct labor hours 4000…
Q: Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleetof…
A: Variance refers to the difference of budgeted and actual figures relating to revenue or expense…
Q: Ethics and the Manager Terri Ronsin had recently been transferred to the Home Security Systems…
A: 1. When the estimated labor hours for the purpose of computing the pre-determined overhead rate is…
Q: The Personnel Department at Hernandez Bros. is centralized and provides services to the two…
A: Activity based costing system: It is precise method of allocation of overhead to the products. Under…
Q: The next two questions are based on the problem below. Question 1: How much is the cost of goods…
A: Cost of goods manufactured means the cost incurred for manufacturing the finished product. Jobs…
Q: Mott Company recently implemented a JIT manufacturing system. After one year of operation,Heidi…
A: A just-in-time (JIT) inventory system is a business strategy that involves getting things as near to…
Q: XYZ Company's customer service department follows up on customer complaints by telephone inquiry.…
A: Total number of calls initiated = 7000 Calls for marketing division = 3000 Therefore, calls for…
Q: Turquoise Ltd produces a range of dry food in packets and wet food in cans using different…
A: There are 3 methods to allocate support/service department costs:- Direct method Step method…
Q: Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and…
A: Segment Income Statement: A segmented income statement offers more information by dividing down…
Q: Home Products Company manufactures a complete line of kitchen glassware. The Beverage Division…
A: In order to perform the business activities effectively and efficiently, business enterprises are…
Q: The Gourmand Cooking School runs short cooking courses at its small campus. Management has…
A: The flexible budget performance report is prepared to evaluate the difference between actual…
Q: The manager of the Personnel Department at City Enterprises has been reading about time-driven ABC…
A: Given that, the following are the estimates for the amount of time it takes to complete each of…
Q: Herrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets…
A: Solution... Standard cost of supplies = $540 per month + $103 per job + $34 per meal = $540 +…
Q: Carr Company provides human resource consulting services to small- and medium-sized companies. Last…
A: Variable cost per client = Total variable cost / No. of clients = $86,800 / 700 clients = $124 per…
Q: acius Corporationis conducting a TDABC study in its Customer Service Department. The company has…
A: Cost of employee per week (39780*11)/50 = 8751.6 Practical capacity of total employees = 2400*11*85%…
Q: Saratoga Company manufactures jobs to customer specifications. The company is conducting a…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Consider the following additional information about these two products. If activity-based costing is…
A: Overhead means the amount of expenses incurred indirectly to produce the goods. These expenses can…
Q: Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of…
A: Fixed overhead costs are those indirect costs which will not change with change in activity level.…
Q: Cassidy Manning is the assistant controller at LeMar Packaging, Inc., a manufacturer of cardboard…
A: Ethics implies the arrangement of rules that the association ought to follow. While in business,…
Q: Wember Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets…
A: Catering Supplies in planning budget=Fixed+Planned jobs+Planned meals
Q: Hernandez Corp. wants to compute its throughput for August. The following production data are…
A: Manufacturing cycle efficiency is calculated by dividing value added time by the total processing…
Q: Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In…
A: Direct labor per filing cabinet = 30 minutes Therefore cabinets per hour = (60 minutes /20 minutes)=…
Q: Wember Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets…
A: Cost associates with No. of Job = No. of jobs x Cost per job = 21 jobs x $80 = $1,680 Cost…
Q: Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and…
A: Hi Student Since there are multiple subparts,we will answer only first three subparts. If you want…
Q: Herrod Catering uses two measures of activity. Jobs and meals, In the cost formulas in Its budgets…
A: Spending Variance Spending variance which is indicate that the comparison between the actual amount…
Q: Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In…
A: Units of production 18000 20000 22000 Direct labor time per unit 12 12 12 Total time required…
Q: Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain…
A: Income statement: It is a financial statement prepared by a company that reports revenues and…
Q: oking for cost savings in administrative areas, the vice-president for human resources at McMahon…
A: Step 1 Productivity is measured by comparing the amount of goods and services produced with the…
Q: McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy…
A: We need to find out the gross profit percentage for getting the answer.
Q: The manager of the Personnel Department at City Enterprises has been reading about time-driven ABC…
A: Activity Time Required Total Interviews 45 Mins * 1200 54000 Hiring 60 Mins*375 22500…
Q: For years, EML has allocated overhead based on total machine hours. A recent assessment of overhead
A: You're a well-known local management auditor: Recognition: The issue is around the Integration,…
Q: A local picnic table manufacturer has budgeted these overhead costs: Purchasing $63,000 Handling…
A: Activity-based costing (ABC) analysis can be defined as a method of assigning overhead costs on the…
Q: After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's…
A:
Q: St. Augustine Hospital has been hit with a number of complaints about its food servicefrom patients,…
A: A. Yes, St. Augustine should outsource its food-service operation to FINS because it is benefiting…
Q: Managers at Hughes Limited have become concerned about declining profits although market demand for…
A: Lets understand the basics. In activity based costing, cost is allocated to products based on the…
Q: A local picnic table manufacturer has budgeted these overhead costs: Purchasing $80,000 Handling…
A: The overhead rate is calculated as total cost divided by the activity usage units.
Q: Looking for cost savings in administrative areas, the vice-president for human resources at McMahon…
A: Partial labour Productivity is measure related to total output at single input labour hour.
Q: Bell & Porter has the following average times (in hours). 1.60 Inspecting product Manufacturing…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: As the cost accounting manager at Cambria Chemicals (CC), you are responsible for compiling and…
A: Factor Productivity: It is a way to measure the efficiency of the company to convert the input into…
Q: Management at Lantana Inc. has decided to begin using throughput as a divisional performance…
A: The percentage of production time that is spent on value-added activities is known as manufacturing…
Q: Herrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets…
A: Spending variance = It is the difference between the actual amount of the expenses and the expected…
Q: Namco Inc. is a large company that segments its business into cost and profit centers. The Cost…
A: Department Margin = Department sales - Department variable costs - Traceable Fixed Costs
Q: AirQual Test Corporation provides on-site air quality testing services. The company has provided the…
A:
Q: Marple Associates is a consulting firm that specializes in information systems for construction and…
A: Marginal costing is the accounting system wherein variable costs are charged to cost units and fixed…
Q: The Smart Company is located in Toronto, Ontario, Canada. The company has been in business for 10…
A: Lets understand the basics. Overhead is a cost which can not be tracked on the products. So for…
Looking for cost savings in administrative areas, the vice-president for human resources at McMahon Corporation asked his assistant to collect data on the employee cafeterias in the four McMahon locations around the country. After two days, the assistant returned with the following data for the previous year.
Mobile | Pecos | Spokane | Lansing | |
Labor-hours | 35,500 | 58,800 | 24,100 | 6,000 |
Meals served | 111,000 | 217,000 | 77,000 | 13,300 |
Required:
a. Compute the partial productivity measures for labor for the four locations. (Round your answers to 3 decimal places.)
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
- Mott Company recently implemented a JIT manufacturing system. After one year of operation, Heidi Burrows, president of the company, wanted to compare product cost under the JIT system with product cost under the old system. Motts two products are weed eaters and lawn edgers. The unit prime costs under the old system are as follows: Under the old manufacturing system, the company operated three service centers and two production departments. Overhead was applied using departmental overhead rates. The direct overhead costs associated with each department for the year preceding the installation of JIT are as follows: Under the old system, the overhead costs of the service departments were allocated directly to the producing departments and then to the products passing through them. (Both products passed through each producing department.) The overhead rate for the Machining Department was based on machine hours, and the overhead rate for assembly was based on direct labor hours. During the last year of operations for the old system, the Machining Department used 80,000 machine hours, and the Assembly Department used 20,000 direct labor hours. Each weed eater required 1.0 machine hour in Machining and 0.25 direct labor hour in Assembly. Each lawn edger required 2.0 machine hours in Machining and 0.5 hour in Assembly. Bases for allocation of the service costs are as follows: Upon implementing JIT, a manufacturing cell for each product was created to replace the departmental structure. Each cell occupied 40,000 square feet. Maintenance and materials handling were both decentralized to the cell level. Essentially, cell workers were trained to operate the machines in each cell, assemble the components, maintain the machines, and move the partially completed units from one point to the next within the cell. During the first year of the JIT system, the company produced and sold 20,000 weed eaters and 30,000 lawn edgers. This output was identical to that for the last year of operations under the old system. The following costs have been assigned to the manufacturing cells: Required: 1. Compute the unit cost for each product under the old manufacturing system. 2. Compute the unit cost for each product under the JIT system. 3. Which of the unit costs is more accurate? Explain. Include in your explanation a discussion of how the computational approaches differ. 4. Calculate the decrease in overhead costs under JIT, and provide some possible reasons that explain the decrease.Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?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?
- Joseph Fox, controller of Thorpe Company, has been in charge of a project to install an activity-based cost management system. This new system is designed to support the companys efforts to become more competitive. For the past six weeks, he and the project committee members have been identifying and defining activities, associating workers with activities, and assessing the time and resources consumed by individual activities. Now, he and the project committee are focusing on three additional implementation issues: (1) identifying activity drivers, (2) assessing value content, and (3) identifying cost drivers (root causes). Joseph has assigned a committee member the responsibilities of assessing the value content of five activities, choosing a suitable activity driver for each activity, and identifying the possible root causes of the activities. Following are the five activities with possible activity drivers: The committee member ran a regression analysis for each potential activity driver, using the method of least squares to estimate the variable and fixed cost components. In all five cases, costs were highly correlated with the potential drivers. Thus, all drivers appeared to be good candidates for assigning costs to products. The company plans to reward production managers for reducing product costs. Required: 1. What is the difference between an activity driver and a cost driver? In answering the question, describe the purpose of each type of driver. 2. For each activity, assess the value content and classify each activity as value-added or non-value-added (justify the classification). Identify some possible root causes of each activity, and describe how this knowledge can be used to improve activity performance. For purposes of discussion, assume that the value-added activities are not performed with perfect efficiency. 3. Describe the behavior that each activity driver will encourage, and evaluate the suitability of that behavior for the companys objective of becoming more competitive.Handbrain Inc. is considering a change to activity-based product costing. The company produces two products, cell phones and tablet PCs, in a single production department. The production department is estimated to require 2,000 direct labor hours. The total indirect labor is budgeted to be 200,000. Time records from indirect labor employees revealed that they spent 30% of their time setting up production runs and 70% of their time supporting actual production. The following information about cell phones and tablet PCs was determined from the corporate records: a. Determine the indirect labor cost per unit allocated to cell phones and tablet PCs under a single plantwide factory overhead rate system using the direct labor hours as the allocation base. b. Determine the budgeted activity costs and activity rates for the indirect labor under activity-based costing. Assume two activitiesone for setup and the other for production support. c. Determine the activity cost per unit for indirect labor allocated to each product under activity-based costing. d. Why are the per-unit allocated costs in (a) different from the per-unit activity cost assigned to the products in (c)?Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Previously, Sanjay Bhatt, Firenza Companys controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours. Sanjay has been asked to prepare bids for two jobs with the following information: The typical bid price includes a 40 percent markup over full manufacturing cost. Required: 1. Calculate a plantwide rate for Firenza Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate activity rates for the four overhead activities. What is the bid price of each job using these rates? 3. Which bids are more accurate? Why?
- The controller for Muir Companys Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible budgeting. She decided to concentrate on the past 12 months since that time period was one in which there was little important change in technology, product lines, and so on. Data on overhead costs, number of machine hours, number of setups, and number of purchase orders are in the following table. Required: 1. Calculate an overhead rate based on machine hours using the total overhead cost and total machine hours. (Round the overhead rate to the nearest cent and predicted overhead to the nearest dollar.) Use this rate to predict overhead for each of the 12 months. 2. Run a regression equation using only machine hours as the independent variable. Prepare a flexible budget for overhead for the 12 months using the results of this regression equation. (Round the intercept and x-coefficient to the nearest cent and predicted overhead to the nearest dollar.) Is this flexible budget better than the budget in Requirement 1? Why or why not?Communications Jamarcus Bradshaw, plant manager of Georgia Paper Companys papermaking mill, was looking over the cost of production reports for July and August for the Papermaking Department. The reports revealed the following: Jamarcus was concerned about the increased cost per ton from the output of the department. As a result, he asked the plant controller to perform a study to help explain these results. The controller, Leann Brunswick, began the analysis by performing some interviews of key plant personnel in order to understand what the problem might be. Excerpts from an interview with Len Tyson, a paper machine operator, follow: Len: We have two papermaking machines in the department. I have no data, but I think paper machine No. 1 is applying too much pulp and, thus, is wasting both conversion and materials resources. We haven't had repairs on paper machine No. 1 in a while. Maybe this is the problem. Leann: How does too much pulp result in wasted resources? Len: Well, you see, if too much pulp is applied, then we will waste pulp material. The customer will not pay for the extra product; we just use more material to make the product. Also, when there is too much pulp, the machine must be slowed down in order to complete the drying process. This results in additional conversion costs. Leann: Do you have any other suspicions? Len: Well, as you know, we have two productsgreen paper and yellow paper. They are identical except for the color. The color is added to the papermaking process in the paper machine. I think that during August these two color papers have been behaving very differently. I don't have any data, but it just seems as though the amount of waste associated with the green paper has increased. Leann: Why is this? Len: I understand that there has been a change in specifications for the green paper, starting near the beginning of August. This change could be causing the machines to run poorly when making green paper. If this is the case, the cost per ton would increase for green paper. Leann also asked for a database printout providing greater detail on Augusts operating results. September 9 Requested by: Leann Brunswick Papermaking DepartmentAugust detail Prior to preparing a report, Leann resigned from Georgia Paper Company to start her own business. You have been asked to take the data that Leann collected, and write a memo to Jamarcus Bradshaw with a recommendation to management. Your memo should include analysis of the August data to determine whether the paper machine or the paper color explains the increase in the unit cost from July. Include any supporting schedules that are appropriate. Round any calculations to the nearest cent.Types of Responsibility Centers Consider each of the following independent scenarios: a. Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed his hair back and sighed. December had been a bad month. Two machines had broken down, and some factory production workers (all on salary) were idled for part of the month. Materials prices increased, and insurance premiums on the factory increased. No way out of it; costs were going up. He hoped that the marketing vice president would be able to push through some price increases, but that really wasnt his department. b. Joanna Pauly was delighted to see that her ROI figures had increased for the third straight year. She was sure that her campaign to lower costs and use machinery more efficiently (enabling her factories to sell several older machines) was the reason why. Joanna planned to take full credit for the improvements at her semiannual performance review. c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from headquarters detailing the recent cost increases for the laser printer line. Headquarters suggested raising prices. Great, thought Gil, an increase in price will kill sales and revenue will go down. Why cant the plant shape up and cut costs like every other company in America is doing? Why turn this into my problem? d. Susan Whitehorse looked at the quarterly profit and loss statement with disgust. Revenue was down, and cost was upwhat a combination! Then she had an idea. If she cut back on maintenance of equipment and let a product engineer go, expenses would decreaseperhaps enough to reverse the trend in income. e. Shonna Lowry had just been hired to improve the fortunes of the Southern Division of ABC Inc. She met with top staff and hammered out a 3-year plan to improve the situation. A centerpiece of the plan is the retiring of obsolete equipment and the purchasing of state-of-the-art, computer-assisted machinery. The new machinery would take time for the workers to learn to use, but once that was done, waste would be virtually eliminated. Required: For each of the above independent scenarios, indicate the type of responsibility center involved (cost, revenue, profit, or investment).
- A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.Thayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity: Required: Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, indicate why they are non-value-added.Use the following information for Exercises 10-56 and 10-57: Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last years delivery operations: Rostand employs a standard costing system. During the year, a variable overhead rate of 5.10 per hour was used. The labor standard requires 0.80 hour per delivery. Exercise 10-56 Variable Overhead Variances, Service Company Refer to the information for Rostand Inc. above. Required: 1. Compute the standard hours allowed for actual deliveries made last year. 2. Compute the variable overhead spending and efficiency variances.