Cost Accounting42Problem 10estimateoverhead costs to plan its operations. A recent trade publication revealed thatoverhead costs tend to vary with machine hours. To check this, they collected thefollowing data for the past 12 months.ValdezMotors Co. makes motorcycles. Management wants toOverhead CostsP 4,5004,2254,3215,2504,8005,1004,4504,2005,4754,7604,3253,975Machine Hours175Month No.170316041901756.20071608.1509.210101801701112145Requirements1. Use the high-low method to estimate the fixed and variable portion ofoverhead costs based on machine hours.2. If the plant is planning to operate at a level of 200 machine hours nextperiod, what would be the estimated overhead costs?3. Use the method of least square to estimate the fixed and variable portion ofoverhead costs based on machine hours.

The question is based on the concept of Cost Accounting.

Problem 10 estimate Valdez Motors Co. makes motorcycles. Management wants to overhead costs to plan its operations. A recent trade publication revealed that overhead costs tend to vary with machine hours. To check this, they collected the following data for the past 12 months. Overhead Costs P 4,500 4,225 4,321 5,250 Machine Hours 175 Month No. 170 160 190 1.000 34

Problem 10 estimate Valdez Motors Co. makes motorcycles. Management wants to overhead costs to plan its operations. A recent trade publication revealed that overhead costs tend to vary with machine hours. To check this, they collected the following data for the past 12 months. Overhead Costs P 4,500 4,225 4,321 5,250 Machine Hours 175 Month No. 170 160 190 1.000 34

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 28E: Refer to Exercise 8.27. At the end of the year, Meliore, Inc., actually produced 310,000 units of...

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Variable costs and activity bases in decision making The owner of Dawg Prints, a printing company, is planning direct labor needs for the upcoming year. The owner has provided you with the following information for next year's plans: Each color on the banner must be printed one at a time. Thus, for example, a four-color banner will need to be run through the printing operation four separate times. The total production volume last year was 600 banners, as shown below. The four-color banner is a new product offering for the upcoming year. The owner believes that the expected 600-unit increase in volume from last year means that direct labor expenses should increase by 100% (600 + 600). What do you think?
Refer to Exercise 8.27. At the end of the year, Meliore, Inc., actually produced 310,000 units of the standard model and 115,000 of the deluxe model. The actual overhead costs incurred were: Required: Prepare a performance report for the period. In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items: Required: 1. Prepare an overhead budget for the expected activity level for the coming year. 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products) and a budget for production that is 20 percent lower than expected.
(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.
Refer to Exercise 20.10. Assume the economic lot size for small casings is 120,000 and that of the large casings is 40,000. Morrison Manufacturing sells an average of 9,600 small casings per workday and an average of 3,200 large casings per workday. It takes Morrison two days to set up the equipment for small or large casings. Once set up, it takes three workdays to produce a batch of small casings and five days for large casings. There are 250 workdays available per year. Required: 1. What is the reorder point for small casings? Large casings? 2. Using the economic order batch size, is it possible for Morrison to produce the amount that can be sold of each casing? Does scheduling have a role here? Explain. Is this a push- or pull-through system approach to inventory management? Explain.
Relevant costsHigh Frequency manufactures and sells wireless headphones. Information on last year’s operations (sales and production of last year’s model) follows. Sales price per unit $77 Costs per unit Direct material $18 Direct labor 15 Overhead (50% variable) 13 Selling costs (40% variable) 22 Production in units 11,000 Sales in units 10,450 In April of the current year, the new model is in production, and it renders last year’s model obsolete. If the remaining 500 units of of last year’s model are to be sold through regular channels, what is the minimum price per unit, that the company would accept for the headphones? $
Cornerstones of Cost Management 4th Ed. - Chapter 4 Scenario IV: Goodmark Company produces two types of birthday cards: scented and regular. Expected product data for the coming year are given below. Overhead costs are identified by activity. Scented Cards Regular Cards Total Units produced 20,000 200,000 - Prime costs $160,000 $1,500,000 $1,660,000 Direct labor hours 20,000 160,000 180,000 Number of setups 60 40 100 Machine hours 10,000 80,000 90,000 Inspection hours 2,000 16,000 18,000 Number of moves 180 120 300 Overhead costs: Setting up equipment $240,000 Moving materials 120,000 Machining 200,000 Inspecting products 160,000 Required: 1. Answer the following questions: a. Calculate the activity consumption ratios for Scented cards (round to two decimal places). Setups: Moving materials: Machining: Inspection: b. If only one rate based on direct labor hours were used to assign overhead, Scented Cards would receive…
Athens Corporation manufactures Product A, which is used in the production of mountain bikes. Per-unit information about Product A follows.Prevailing market price P90Direct materials 40Direct labor 16Manufacturing overhead 12Selling and administrative expenses 7Athens has traditionally used a 40% markup on total cost to arrive at a reasonable selling price. The company, though, has noticed a sizable drop in sales volume during the last few quarters, which it attributes to new entrants in the marketplace.1. Based on the markup, the selling price of Product A would be 2. If management desired to meet the prevailing market price and maintain the current rate of profit on sales, what must happen to the company's total costs (increase or decrease)? By how much?
Problem 2 LeDuc Inc. produces a line of products which includes men’s wallets. During 2011, there are 4,000 wallets budgeted for production with a total material cost for the wallets of $18,860 and direct labor totaling $10,250. Manufacturing overhead costs are budgeted at $2.80 per wallet of which $1.22 is variable. Unavoidable fixed overhead is 30% of total fixed overhead. Good Supply has offered to sell the wallets to LeDuc for $9.00 each. Required A. Use incremental analysis to determine if the company should outsource. B. What qualitative factors should the company consider in making the decision?
Choose the letter of answer: Hilby, Inc., uses the high-low method to analyze cost behavior. The company observed that at 12,000 machine hours of activity, total maintenance costs averaged P7.00 per hour. When activity jumped to 15,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled P6.40. On the basis of this information, the variable cost per machine hour was: a. P4.00.b. P6.40.c. P6.70.d. P7.00.
Hemlock Nutritional Supplements (HNS) provides you with the following accounting records on manufacturing cost for the most recent month: Direct materials $ 126,000 Direct labor 105,000 Variable overhead 92,400 Production was 60,000 units (cases). Fixed manufacturing overhead was $144,000. For the coming year, costs are expected to increase as follows: direct materials costs by 30 percent, excluding any effect of volume changes; direct labor by 6 percent; and fixed manufacturing overhead by 13.5 percent. Variable manufacturing overhead per unit is expected to remain the same. Required: Prepare a cost estimate for a volume level of 48,000 units of product in the upcoming month. Determine the costs per unit for the most recent month and for the upcoming month.
Problem A. The C Division of White Company sells its product for P30 per unit. Variable cost per unit are: manufacturing, P12; and selling and administrative, P2. Fixed cost are: P200,000 manufacturing overhead, and P50,000 selling administrative. There was no beginning inventory in 2007. Expected sale for next year is 40,000 units. Ryan Santos, the manager of the C Division, is under pressure to improve the performance of the division. As he plans for next year, he decided to produce 40,000 units. What would the manufacturing cost per unit be under absorption costing? What would the manufacturing cost per unit be under variable costing? What would the net income be under absorption costing? What would the net income be under variable costing?
Question 3: An organization wants to prepare an aggregate plan for its manufacturing facility. The relevant information is shown as follows:  Production time: 1 hour per unit Beginning inventory: 500 units Average labor cost: $10 per hour Safety stock: 50% of monthly demand Workweek: 5 days, Shift length: 8 hours Shortage cost: $20 per unit per month Days per month: 20 work days/month Carrying cost: $5 per unit per monthManagement prefers to keep a constant workforce and production level, absorbing variations in demand through inventory excesses and shortages. Demand not met is carried over to the following month. Develop an aggregate plan that will meet the demand and other conditions of the problem