Pryad Corporation makes ultra-lightweight backpacking tents. Data concerning the company's two product lines appear below: Deluxe Standard Direct materials per unit Direct labor per unit. Direct labor-hours per unit $60.00 $45.00 $9.60 $7.20 0.8 DLHS 0.6 DLHS Estimated annual production 10,000 units 70,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours... $290,000 50,000 DLHS .... Required: Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 1.

Pryad Corporation makes ultra-lightweight backpacking tents. Data concerning the company's two product lines appear below: Deluxe Standard Direct materials per unit Direct labor per unit. Direct labor-hours per unit $60.00 $45.00 $9.60 $7.20 0.8 DLHS 0.6 DLHS Estimated annual production 10,000 units 70,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours... $290,000 50,000 DLHS .... Required: Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 1.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter20: Variable Costing For Management Analysis

Section: Chapter Questions

Problem 20.22EX: Variable costing income statement and contribution margin analysis for a service company The actual...

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Variable costs and activity bases in decision making The owner of Warwick Printing, 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: One Color Two Color Three Color Four Color Total Number of banners 212 274 616 698 1,800 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 800 banners, as follows: One Color Two Color Three Color Total Number of banners 180 240 380 800 As you can see, the four-color banner is a new product offering for the upcoming year. The owner believes that the expected 1,000-unit increase in volume from last year means that direct labor expenses should increase by 125% (1,000 800). What do you think?
Product costing and decision analysis for a service company Blue Star Airline provides passenger airline service, using small jets. The airline connects four major cities: Charlotte, Pittsburgh, Detroit, and San Francisco. The company expects to fly 170,000 miles during a month. The following costs are budgeted for a month: Fuel 2,120,000 Ground personnel 788,500 Crew salaries 850,000 Depreciation 430,000 Total costs 4,188,500 Blue Star management wishes to assign these costs to individual flights in order to gauge the profitability of its service offerings. The following activity bases were identified with the budgeted costs: Airline Cost Activity Base Fuel, crew, and depreciation costs Number of miles flown Ground personnel Number of arrivals and departures at an airport The size of the companys ground operation in each city is determined by the size of the workforce. The following data are available from corporate records for each terminal operation: Terminal City Ground Personnel Cost Number of Arrivals/Departures Charlotte 256,000 320 Pittsburgh 97,500 130 Detroit 129,000 150 San Francisco 306,000 340 Total 788,500 940 Three recent representative flights have been selected for the profitability study. Their characteristics are as follows: Description Miles Flown Number of Passengers Ticket Price per Passenger Flight 101 Charlotte to San Francisco 2,000 80 695,00 Flight 102 Detroit to Charlotte 800 50 441,50 Flight 103 Charlotte to Pittsburgh 400 20 382,00 Instructions 1. Determine the fuel, crew, and depreciation cost per mile flown. 2. Determine the cost per arrival or departure by terminal city. 3. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departure to its origin and destination city pairs.
Variable costing income statement and contribution margin analysis for a service company The actual and planned data for Underwater University for the Fall term were as follows: Actual Planned Enrollment 4,500 4,125 Tuition per credit hour 120 135 Credit hours 60,450 43,200 Registration, records, and marketing cost per enrolled student 275 275 Instructional costs per credit hour 64 60 Depreciation on classrooms and equipment 825,600 825,600 Registration, records, and marketing costs vary by the number of enrolled .students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost. A. Prepare a variable costing income statement showing the contribution margin and income from operations for the Fall term. B. Prepare a contribution margin analysis report comparing planned with actual performance for the Fall term.
Segment variable costing income statement and effect on income of change in operations Valdespin Company manufactures three sizes of camping tentssmall (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (1) continue Size M, (2) discontinue Size M and reduce total output accordingly, or (3) discontinue Size M and conduct an advertising campaign to expand the sales of Size S so that the entire plant capacity can continue to be used. If Proposal 2 is selected and Size M is discontinued and production curtailed, the annual fixed production costs and fixed operating expenses could be reduced by 46,080 and 532,240. respectively. If Proposal 3 is selected, it is anticipated that an additional annual expenditure of 34,560 for the rental of additional warehouse space would yield an additional 130% in Size S sales volume. It is also assumed that the increased production of Size S would utilize the plant facilities released by the discontinuance of Size M. The sales and costs have been relatively stable over the past few years, and they are expected to remain so for the foreseeable future. The income statement for the past year ended June 30, 20Y9, is as follows: Instructions 1. Prepare an income statement for the past year in the variable costing: format. Use the following headings: Data for each style should be reported through contribution margin. The fixed costs should be deducted from the total contribution margin, as reported in the Total column, to determine income from operations. 2. Based on the income statement prepared in (1) and the other data presented, determine the amount by which total annual income from operations would be reduced below its present level if Proposal 2 is accepted. 3. Prepare an income statement in the variable costing format, indicating the projected annual income from operations if Proposal 3 is accepted. Use the following headings: Data for each style should be reported through contribution margin. The fixed costs should be deducted from the total contribution margin as reported in the Total column. For purposes of this problem, the expenditure of 34,560 for the rental of additional warehouse space can be added to the fixed operating expenses. 4. By how much would total annual income increase above its present level if Proposal 3 is accepted? Explain.
Variable costing income statement and effect on income of change in operations Kimbrell Inc. manufacture three sizes of utility tablessmall (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (1) continue Size M, (2) discontinue Size M and reduce total output accordingly, or (3) discontinue Size M and conduct an advertising campaign to expand the sales of Size S so that the entire plant capacity can continue to be used. If Proposal 2 is selected and Size M is discontinued and production curtailed, the annual fixed production costs and fixed operating expenses could be reduced by 142,500 and 28,350. respectively. If Proposal 3 is selected, it is anticipated that an additional annual expenditure of 85,050 for the salary of an assistant brand manager (classified as a fixed operating expense) would yield an additional 130% in Size S sales volume. It is also assumed that the increased production of Size S would utilize the plant facilities released by the discontinuance of Size M. The sales and costs have been relatively stable over the past few years, and they are expected to remain so for the foreseeable future. The income statement for the past year ended December 31, 20Y8, is as follows: Instructions 1. Prepare an income statement for the past year in the variable costing format. Use the following headings: Size S M L Total Data for each style should be reported through contribution margin. The fixed costs should lie deducted from the total contribution margin, as reported in the Total" column, to determine income from operations. 2. Based on the income statement prepared in (1) and the other data presented above, determine the amount by which total annual income from operations would be reduced below its present level if Proposal 2 is accepted. 3. Prepare an income statement in the variable costing format, indicating the projected annual income from operations if Proposal 3 is accepted. Use the following headings: Size S L Total Data for each style should be reported through contribution margin. The fixed costs should lie deducted from the total contribution margin as reported in the "Total" column. For purposes of this problem, the additional expenditure of 85,050 for the assistant brand manager's salary can be added to the fixed operating expenses. 4. By how much would total annual income increase above its present level if Proposal 3 is accepted? Explain.