Problem C. Transportation Model (Balanced) Izzy Plastic Processing Company has three processing plants in three locations. It received orders from three customers. Plant 1 has 700 cartons, Plant 2 has 500 cartons, and Plant 3 has 300 cartons. Customer A needs 400 cartons, customer B needs 500 cartons, and customer C needs 600 cartons. The costs of transportation per carton of the product from the plants to the customers are presented as follows: Customer A Customer B Customer C Plant 1 Php5.00 Php2.00 Php5.50 Plant 2 4.00 2.50 3.00 Plant 3 4.50 3.50 3.00 Required. Determine the distribution of the products to the three customers where the transportation are minimized using the stepping-stone methods following the northwest corner rule for the initial solution. Construct all transportation table with its corresponding transportation cost and tests for improvement of vacant cells.

Problem C. Transportation Model (Balanced) Izzy Plastic Processing Company has three processing plants in three locations. It received orders from three customers. Plant 1 has 700 cartons, Plant 2 has 500 cartons, and Plant 3 has 300 cartons. Customer A needs 400 cartons, customer B needs 500 cartons, and customer C needs 600 cartons. The costs of transportation per carton of the product from the plants to the customers are presented as follows: Customer A Customer B Customer C Plant 1 Php5.00 Php2.00 Php5.50 Plant 2 4.00 2.50 3.00 Plant 3 4.50 3.50 3.00 Required. Determine the distribution of the products to the three customers where the transportation are minimized using the stepping-stone methods following the northwest corner rule for the initial solution. Construct all transportation table with its corresponding transportation cost and tests for improvement of vacant cells.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4BE: Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and...

See similar textbooks

Similar questions

Product Mix Decision, Single Constraint Sealing Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of 15,000 hours per year. Information on the three types of storage units is as follows: Sealings marketing director has assessed demand for the three types of storage units and believes that the firm can sell as many units as it can produce. Required: 1. How many of each type of unit should be produced and sold to maximize the companys contribution margin? What is the total contribution margin for your selection? 2. Now suppose that Sealing Company believes that it can sell no more than 12,000 of the deluxe model but up to 50,000 each of the basic and standard models at the selling prices estimated. What product mix would you recommend, and what would be the total contribution margin?
Nutterco, Inc., produces two types of nut butter: peanut butter and cashew butter. Of the two, peanut butter is the more popular. Cashew butter is a specialty line using smaller jars and fewer jars per case. Data concerning the two products follow: aPractical capacity less expected usage (all unused capacity is permanent). bIn some cases, activity capacity must be purchased in steps (whole units). These steps are provided as necessary. The cost per step is the fixed activity rate multiplied by the step units. The fixed activity rate is the expected fixed activity costs divided by practical activity capacity. Annual overhead costs are listed below. These costs are classified as fixed or variable with respect to the appropriate activity driver. aCosts associated with practical activity capacity. The machine fixed costs are all depreciation with direct labor hours as the driver. bThese costs are for the actual levels of the cost driver. Required: 1. Prepare a traditional segmented income statement, using a unit-level overhead rate based on direct labor hours. Using this approach, determine whether the cashew butter product line should be kept or dropped. 2. Prepare an activity-based segmented income statement. Repeat the keep-or-drop analysis using an ABC approach.
Theory of constraints, throughput margin, and relevant costs. Washington Industries manufactures electronic testing equipment. Washington also installs the equipment at customers’ sites and ensures that it functions smoothly. Additional information on the manufacturing and installation departments is as follows (capacities are expressed in terms of the number of units of electronic testing equipment): Washington manufactures only 250 units per year because the installation department has only enough capacity to install 250 units. The equipment sells for $55,000 per unit (installed) and has direct material costs of $30,000. All costs other than direct material costs are fixed. The following requirements refer only to the preceding data. There is no connection between the requirements.
Ethics and a Cost-Volume-Profit Application Danna Lumus, the marketing manager for a division that produces a variety of paper products, is considering the divisional manager's request for a sales forecast for a new line of paper napkins. The divisional manager has been gathering data so that he can choose between two different production processes. The first processwould have a variable cost of $10 per case produced and total fixed cost of $100,000. The second process would have a variable cost of $6 per case and total fixed cost of $200,000. The selling pricewould be $30 per case. Danna had just completed a marketing analysis that projects annual sales of 30,000 cases. Danna is reluctant to report the 30,000 forecast to the divisional manager. She knows that the first process would be labor intensive, whereas the second would be largely automated with little labor and no requirement for an additional production supervisor. If the first process is chosen, Jerry Johnson, a good friend,…
Choosing the Optimal Product Mix with One Constrained Resource Billings Company produces two products, Product Reno and Product Tahoe. Each product goes through its own assembly and finishing departments. However, both of them must go through the painting department. The painting department has capacity of 1,670 hours per year. Product Reno has a unit contribution margin of $120 and requires five hours of painting department time. Product Tahoe has a unit contribution margin of $50 and requires two hours of painting department time. There are no other constraints. Required: 1. What is the contribution margin per hour of painting department time for each product? Contribution Margin Reno $fill in the blank 1 Tahoe $fill in the blank 2 2. What is the optimal mix of products? If an amount is zero, enter "0". Optimal Mix Reno fill in the blank 3 units Tahoe fill in the blank 4 units 3. What is the total contribution margin earned for the optimal mix?$fill in the…
Choosing the Optimal Product Mix with One Constrained Resource Billings Company produces two products, Product Reno and Product Tahoe. Each product goes through its own assembly and finishing departments. However, both of them must go through the painting department. The painting department has capacity of 2,505 hours per year. Product Reno has a unit contribution margin of $125 and requires five hours of painting department time. Product Tahoe has a unit contribution margin of $78 and requires three hours of painting department time. There are no other constraints. Required: 1. What is the contribution margin per hour of painting department time for each product? Contribution Margin Reno $fill in the blank 1 Tahoe $fill in the blank 2 2. What is the optimal mix of products? If an amount is zero, enter "0". Optimal Mix Reno fill in the blank 3 units Tahoe fill in the blank 4 units 3. What is the total contribution margin earned for the optimal mix?$fill in…
Activity-Based Supplier Costing Bowman Company manufactures cooling systems. Bowman produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom deliver late; however, Manzer sells the component for $89 per unit, while Buckner sells the same component for $86. Bowman purchases 80% of its components from Buckner because of its lower price. The total annual demand is 4,000,000 components. To help assess the cost effect of the two components, the following data were collected for supplier-related activities and suppliers: Required: 1. Calculate the cost per component for each supplier, taking into consideration the costs of the supplier-related activities and using the current prices and sales volume. ( Note : Round the unit cost to two decimal places.) 2. Suppose that Bowman loses $4,000,000 in sales per year because it develops a poor…
Activity-Based Supplier Costing Bowman Company manufactures cooling systems. Bowman produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom deliver late; however, Manzer sells the component for $89 per unit, while Buckner sells the same component for $86. Bowman purchases 80% of its components from Buckner because of its lower price. The total annual demand is 4,000,000 components. To help assess the cost effect of the two components, the following data were collected for supplier-related activities and suppliers: I. Activity Data Activity Cost Inspecting components (sampling only) $630,000 Reworking products (due to failed component) 7,770,000 Warranty work (due to failed component) 8,770,000 II. Supplier Data Manzer Inc. Buckner Company Unit purchase price $89 $86 Units purchased 800,000 3,200,000 Sampling hours*…
Activity-Based Supplier Costing Bowman Company manufactures cooling systems. Bowman produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom deliver late; however, Manzer sells the component for $89 per unit, while Buckner sells the same component for $86. Bowman purchases 80% of its components from Buckner because of its lower price. The total annual demand is 4,000,000 components. To help assess the cost effect of the two components, the following data were collected for supplier-related activities and suppliers: I. Activity Data Activity Cost Inspecting components (sampling only) $605,000 Reworking products (due to failed component) 7,570,000 Warranty work (due to failed component) 10,270,000 II. Supplier Data Manzer Inc. Buckner Company Unit purchase price $89 $86 Units purchased 800,000 3,200,000 Sampling hours*…
Jordan electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly costs of producing 9,100 containers follow Unit-level material $6,000 Unit-level labor $6,700 unit-level overhead $3,300 product-level costs* $11,700 Allocated facility-level costs $26,500 *one-third of these costs can be avoided by purchasing the containers. Russo container company has offered to sell comparable containers to Jordan for $2.80 each. Required a) Calculate the total relevant cost should Jordan continue to make the containers. b) Jordan could lease the space it currently uses in the manufacturing process if leasing would produce $11,700 per month, and calculate the total avoidable costs. Should Jordan continue to make the containers? a) Total relevant cost should Jordan continue to make the containers? Total avoidable cost Should Jordan continue to make the containers?
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier’s Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: Unit selling price $3.25 Unit variable cost $1.35 Unit product fixed cost* $0.65 Practical capacity in cases 550,000 *$357,500/550,000 During the coming year, the Glassware Division expects to sell 440,000 cases of this bottle. The Bottled Water Division currently plans to buy 96,270 cases on the outside market for $3.25 each. Ellyn Burridge, manager of the Glassware Division, approached Justin Thomas, manager of the Bottled Water Division, and offered to sell the 96,270 cases for $3.20 each. Ellyn explained to Justin that she can avoid selling costs of $0.13 per case by selling…
Practice problem Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $3.00 per linear foot and full cost of $4.00. Comparable quality wood sells on the open market for $9.00 per linear foot.1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber.2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity.