Non-value-added costs occur in nonmanufacturing organizations, just as they do in manufacturing firms.Required: Identify four potential non-value-added costs in (1) an airline, (2) a bank, and (3) a hotel.
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Non-value-added costs occur in nonmanufacturing organizations, just as they do in manufacturing firms.
Required: Identify four potential non-value-added costs in (1) an airline, (2) a bank, and (3) a hotel.
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- The management of Hartman Company is trying to determine the amount of each of two products to produce over the coming planning period. The following information concerns labor availability, labor utilization, and product profitability: a. Develop a linear programming model of the Hartman Company problem. Solve the model to determine the optimal production quantities of products 1 and 2. b. In computing the profit contribution per unit, management does not deduct labor costs because they are considered fixed for the upcoming planning period. However, suppose that overtime can be scheduled in some of the departments. Which departments would you recommend scheduling for overtime? How much would you be willing to pay per hour of overtime in each department? c. Suppose that 10, 6, and 8 hours of overtime may be scheduled in departments A, B, and C, respectively. The cost per hour of overtime is 18 in department A, 22.50 in department B, and 12 in department C. Formulate a linear programming model that can be used to determine the optimal production quantities if overtime is made available. What are the optimal production quantities, and what is the revised total contribution to profit? How much overtime do you recommend using in each department? What is the increase in the total contribution to profit if overtime is used?In Al-Waha Water Bottling Company, costs of setting up factory machinery for a new production run would be classified as a. Organization - sustaining level activity b. Unit level activity c .none of the given answers d. Product-sustaining level activity e. Batch level activityIn a manufacturing company, overhead allocations are made for three reasons: (1) to determine the full cost of a product; (2) to encourage efficient resource usage; and (3) to compare alternative courses of action for management purposes. 1. Why must overhead be considered a product cost under generally accepted accounting principles? 2. Ayam Company makes plastic dog carriers. The manufacturing process is highly automated and the machine time needed to make any size crate is approximately the same. Ayam’s management decides to begin producing plastic lawn furniture and, to do so, two additional pieces of automated equipment are acquired. Annual depreciation on the new pieces of equipment is P38,000. Should the new overhead cost be allocated over all products manufactured by Ayam? Explain.
- Oxmoor Corporation has two service departments (Maintenance and Human Resources) and three production departments (Machining, Assembly, and Finishing). The two service departments service the production departments as well as each other, and studies have shown that Maintenance provides the greater amount of service. On the basis of this information, which of the following cost allocations would likely occur under the step-down method? Maintenance cost would be allocated to Finishing. Machining cost would be allocated to Assembly. Maintenance cost would be allocated to Human Resources. Human Resources cost would be allocated to Maintenance. Both maintenance cost would be allocated to Finishing and maintenance cost would be allocated to Human Resources.What are the total costs of the production departments (clothing and shoes) after the support department costs of information technology and human resources have been allocated using (a) the direct method, (b) the step-down method (allocate information technology first), (c) the step-down method (allocate human resources first), and (d) the reciprocal method? Assume that all of the work of the IT department could be outsourced to an independent company for $97.50 per hour. If Sportz no longer operated its own IT department, 30% of the fixed costs of the IT department could be eliminated. Should Sportz outsource its IT services?The composting division has identified a source of additional compostable waste at a price of $205 per ton. What would be the impact on the company as a whole if the 400 tons of material is purchased from the outside supplier? As a decentralized unit, what decision would the composting division make regarding the additional material?
- Engineering LLC is facing a cost issues in their production department. The Production manager of Al Maha Engineering LLC wants to adopt standard costing in their company to tackle cost issues. He wants know the meaning of standard cost of a product. Which of the following statement is the meaning of standard cost of a product? a. The average unit cost of products produced during a particular period. b. The average unit cost of products produced in the previous period. c. The unit cost of products incurred at the start of a particular period. d. The planned unit cost of products produced during a particular period.A. Which of the following costs is not a product cost? Depreciation on the plant installed in the factory The electricity cost of the office of factory foreman The cost of shipping finished products to customers The cost of fuel used in the factory B. Which of the following costs is not a period cost? Advertising cost Sales commission Interest Direct labor C. Which of the following would not be classed as a service department? The maintenance department The canteen The finance department The assembly department D. Job costing is the most suitable method for? Oil processing units Transport Companies Sugar Industry Repair shops E. Paper mills are must adopt? Unit costing Process costing Job costing Contract costingAPPLY THE CONCEPTS: Determine the total fixed cost Costs that are not tied to changes in production level across the relevant range are known as "fixed costs." These costs are indirectly assigned to units of production, and many factory overhead costs fall into this category. The business must ensure that all costs are assigned to the product. By assigning fixed costs, business costs are not directly tied to any one unit of production. This is important because it affects both pricing and profits. A machine on the production line at an auto company requires a periodic retooling that costs $150,000 annually. Calculate the total fixed cost per unit at different levels along the relevant range of 100,000 to 400,000 units. If required, round the per unit amounts to two decimal places. Number of Units Produced Fixed Cost per unit 100,000 $ 200,000 $ 300,000 $ 400,000 $ What is the activity base for each business and its associated costs? The first one is completed as an…
- APPLY THE CONCEPTS: Determine the total fixed cost Costs that are not tied to changes in production level across the relevant range are known as "fixed costs." These costs are indirectly assigned to units of production, and many factory overhead costs fall into this category. The business must ensure that all costs are assigned to the product. By assigning fixed costs, business costs are not directly tied to any one unit of production. This is important because it affects both pricing and profits. A machine on the production line at an auto company requires a periodic retooling that costs $150,000 annually. Calculate the total fixed cost per unit at different levels along the relevant range of 100,000 to 400,000 units. If required, round the per unit amounts to two decimal places. I tried using $150,000 in each place but that didn't work Number of Units Produced Fixed Cost per unit 100,000 $________ 200,000 $________ 300,000 $________ 400,000 $________Choose the letter of the correct answer: Which of the following are examples of a mixed cost? I - A building that is used for both manufacturing and sales activities. II - An employee's compensation, which consists of a flat salary plus a commission. III - Depreciation that relates to five different machines. IV - Maintenance cost that must be split between sales and administrative offices.a. I only.b. II only.c. I and III.d. I, III, and IV.e. I, II, III, and IVQuestion 1: Assume a local hotel is a service entity. Give some examples of the hotel’s direct and indirect costs, specifying the cost object of each. How might the hotel’s management use this information? Question 2: Discuss what may be the issues in using process costing to estimate the cost of the services produced in mass service entities. Question 3: The following costs relate to Telecommunications Fiji Inc. 1. The salaries of the technicians who install new phone and data lines. 2. The salaries of the scientists and engineers who develop new services. 3. The cost of cables used to connect new services. 4. The salaries paid to sales staff. 5. The salaries of staff who deal with customer complaints. 6. The cost of fuel for vans used by technicians who install new services. 7. The cost of advertising in the newspapers. 8. The salaries of technicians who resolve service problems. 9. The cost of fuels for vans used by technicians who resolve service problems. Required: Classify the…