Merrill Company makes a household appliance with model number X800. The goal for 2020 is to reduce direct materials usage per unit. No defective units are produced. Manufacturing conversion costs depend on production capacity defined in terms of X800 units that can be produced. The following additional data are available for 2019 and 2020: 2019 b) $50,000 Favorable c) $20,000 Favorable d) $120,000 Unfavorable Units of X800 produced and sold Selling price Direct materials (square feet) Direct material costs per square foot Manufacturing capacity for X800s (units) Total manufacturing conversion costs Manufacturing conversion costs per unit of capacity $20 What is the revenue effect of the growth component of change in operating income, 2019 to 2020? a) $48,000 Favorable 10,000 $100 30,000 2020 $10 12,500 10,500 $96 29,000 $10.50 11,500 $250,000 $218,500 $19

Merrill Company makes a household appliance with model number X800. The goal for 2020 is to reduce direct materials usage per unit. No defective units are produced. Manufacturing conversion costs depend on production capacity defined in terms of X800 units that can be produced. The following additional data are available for 2019 and 2020: 2019 b) $50,000 Favorable c) $20,000 Favorable d) $120,000 Unfavorable Units of X800 produced and sold Selling price Direct materials (square feet) Direct material costs per square foot Manufacturing capacity for X800s (units) Total manufacturing conversion costs Manufacturing conversion costs per unit of capacity $20 What is the revenue effect of the growth component of change in operating income, 2019 to 2020? a) $48,000 Favorable 10,000 $100 30,000 2020 $10 12,500 10,500 $96 29,000 $10.50 11,500 $250,000 $218,500 $19

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 18E: A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price...

See similar textbooks

Similar questions

The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express the companys maintenance costs as an equation where x represents the gallons of paint produced. Then estimate the fixed and variable costs. Predict the maintenance costs i190,000 gallons of paint are produced. Predict the maintenance costs if 81,000 gallons of paint are produced. Using Excel, create a scatter graph of the cost data and explain the relationship between gallons of paint produced and equipment maintenance expenses.
Trifecta Distributors has decided to discontinue manufacturing its X Plus model. Currently, the company has 4,600 partially completed X Plus models on hand. The government has put a recall on a particular part in the X Plus model, so each base model must now be reworked to accommodate the style of the new part. The company has spent $110 per unit to manufacture these X Plus models to their current state. Reworking each X Plus model will cost $20 for materials and $20 for direct labor. In addition, $7 of variable overhead and $32 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be allocated per unit. Il Trifecta completes the X Plus models, it can sell them for $160 per unit. On the other hand, another manufacturer is interested in purchasing the partially completed units for $104 each and converting them into Z Plus models. Prepare a differential analysis per unit to determine if Trifecta should complete the X Plus models or sell them in their current state.
Ratliff Appliances Company makes a household appliance with model number RM16. The goal for 2020 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of RM16 units that can be produced. The industry market size for appliances increased 10% from 2019 to 2020. The following additional data are available for 2019 and 2020: 2019 2020 Units Produced & Sold 33,000 37,950 Selling Price $ 360 $ 345 Direct Materials (square feet) 82,500 87,000 Direct Material Costs per square foot $ 31 $ 33 Manufacturing capacity (units) 41,250 39,850 Total Conversion Costs $ 866,250 $ 797,000 Conversion Costs per unit of capacity $ 21 $ 20 Ignoring the market growth, but considering your answer to question (a), how much of Ratliff Co’s change in income from 2019 to 2020 is due to a cost leadership strategy?
Two companies Malcom and Yoda manufacture the similar hand-sanitizing products. The following data for the two companies for the year 2019 are provided below: Malcom ($) Yoda ($) Sales revenue 60,000 72000 Total costs 42,000 48000 Variable Costs 40 % of sales revenue 50% Required: If sales of the product in Yoda company are equal to 3,000 units, determine the BEP (in units), and present the Break-even chart. In 2019, company Yoda plans to increase the variable cost by $1 while the fixed cost and the selling price will remain constant. Calculate the number of units to be sold in order to earn the same profit as Malcom in 2019. Based on your answers to parts 1 and 2, Discuss which company has a safer financial position, and why. I need the answers of the the remaining subparts too all these three points
The C and K Company makes a household appliance with model number X400. The goal for 2017 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of X500 units that can be produced. The following additional data are available for 2016 and 2017: 2016 2017 Units of X400 produced and sold 12,000 13,800 Selling price $145 $140 Direct materials (square feet) 36,000 34,800 Direct manufacture costs per square foot $13 $15 Manufacturing capacity for X400 (units) 14,000 13,900 Total conversion costs $406,000 $403,100 Conversion costs per units of capacity $29 $29 Calculate the operating income in 2016 and 2017. Calculate the growth, price-recovery, and productivity component that explain the change in operating income from 2016 to 2017.
Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to a single part which is used in the production of a wind instrument. The business earned Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under pressure from shareholders to increase operating income in 2020 and is therefore considering the implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data forvariable cost per unit and total fixed costs were as follows: Questions: a) Compute the selling price per unit in 2019, using the equation method. b) Given the sales of 3,000 units and the selling price calculated in (a), prepare a contribution margin income statement for the year ended December 31, 2019, detailing the components of total fixed costs and clearly showing contribution and net income. c) Calculate Benoit’s break-even point in units and in sales dollars. d) Calculate…
Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to a single part which is used in the production of a wind instrument. The business earned Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under pressure from shareholders to increase operating income in 2020 and is therefore considering the implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data forvariable cost per unit and total fixed costs were as follows: Questions: a) Compute the selling price per unit in 2019, using the equation method. b) Given the sales of 3,000 units and the selling price calculated in (a), prepare a contribution margin income statement for the year ended December 31, 2019, detailing the components of total fixed costs and clearly showing contribution and net income. c) Calculate Benoit’s break-even point in units and in sales dollars. d) Calculate…
Black Widow Company had the following costs for 2020: Raw materials P700,000 Direct labor P100,000 Miscellaneous FOH P80,000 Depreciation on machines P40,000 Rent for the factory building P50,000 Rent for dales office P30,000 Depreciation on store equipment P20,000 How much of those costs should be inventoried under absorption (A) and variable (V) costing methods? Select one: a. (A) P970,000; (V) P800,000 b. (A) P1,000,000; (V) P880,000 c. (A) P1,020,000; (V) P880,000 d. (A) P930,000; (V) P800,000
New Firm, Inc. is a manufacturer of various plastic items. The firm applies OH on the basis of machine hours. The rate for the year 2020 was $5.89 per machine hour. What does the rate mean? Why does the firm use a rate instead of simply computing OH per unit in the same way it computes direct materials and direct labour per unit?
Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to a single part which is used in the production of a wind instrument. The business earned Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under pressure from shareholders to increase operating income in 2020 and is therefore considering theimplementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for variable cost per unit and total fixed costs were as follows:Variable expenses per unit: Direct Material $58Direct Labour $74Variable Manufacturing Overhead $48Fixed expenses: Fixed Manufacturing Overhead $215,000Fixed Selling Costs $65,000Fixed Administrative Costs $160,000 e) The President of Benoit is under pressure from shareholders to increase operating income by 50% in 2020. Management expects per…
Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to a single part which is used in the production of a wind instrument. The business earned Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under pressure from shareholders to increase operating income in 2020 and is therefore considering theimplementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for variable cost per unit and total fixed costs were as follows:Variable expenses per unit: Direct Material $58Direct Labour $74Variable Manufacturing Overhead $48Fixed expenses: Fixed Manufacturing Overhead $215,000Fixed Selling Costs $65,000Fixed Administrative Costs $160,000 Required:a) Compute the selling price per unit in 2019, using the equation method. b) Given the sales of 3,000 units and the…
At the end of 2018, Diatomic Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2019, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows: 2018 2019 Output 45,000 54,000 Output prices $10.00 $10.00 Materials (lbs.) 22,500 22,950 Materials unit price $3.00 $4.00 Labor (hrs.) 18,000 16,875 Labor rate per hour $5.00 $5.00 Power (kwh) 11,250 14,625 Price per kwh $2.00 $3.00 By how much did profit change as a result of profitability changes in labor? a.$23,625 increase b.$23,625 decrease c.$5,625 increase d.$45,000 increase