Do not give image format Java Source, Incorporated, (JSI) roasts, blends, and packages coffee beans for resale. Some of JSI's coffees sell in large volumes,while some newer blends sell in very low volumes. JSI prices its coffees at manufacturing cost plus a markup of 25%.For next year, JSI's budget includes estimated manufacturing overhead cost of $3,040,500. JSI allocates manufacturing overhead toproducts using direct labor-hours. The expected direct labor cost totals $576,000, which represents 48,000 hours of direct labor time.The expected direct materials and direct labor costs for one-pound bags of two of the company's coffee blends appear below.Kenya Dark Viet Select$ 4.20$ 3.50$ 0.42$ 0.42Direct materialsDirect labor (0.035 hour per bag)JSI's controller believes the company's traditional costing system may be providing misleading cost information; therefore, hegathered the following activity-based cost information:Activity Cost PoolPurchasingMaterial handlingQuality controlActivity MeasurePurchase orders.Number of setupsNumber of batchesRoasting hours.Blending hoursPackaging hoursExpected production and salesBatch sizeSetupsPurchase order sizeRoasting time per 100 poundsBlending time per 100 poundsPackaging time per 100 poundsExpected Activity for theYear1,720 orders1,820 setups610 batches1.5 roasting hours0.5 blending hour0.3 packaging hourRoastingBlendingPackagingTotal manufacturing overhead costData regarding the expected production and sales of Kenya Dark and Viet Select coffee are presented below.Kenya Dark98,000 pounds9,800 pounds2 per batch19,600 poundsViet Select1,000 pounds200 pounds2 per batch200 pounds96,100 roasting hours33,700 blending hours25,700 packaging hoursExpected Costfor the Year$ 533,200709,800146,4001,057,1001.5 roasting hours0.5 blending hour0.3 packaging hour337,000257,000$3,040,500 Required:1. Using direct labor-hours as the manufacturing overhead cost allocation base:a. Calculate the plantwide predetermined overhead rate.b. Calculate the unit product cost of one pound of Kenya Dark and one pound of Viet Select.2. Using the activity-based absorption costing approach:a. Calculate the total manufacturing overhead cost allocated to Kenya Dark and Viet Select.b. Using the data developed in (2a) above, compute Kenya Dark's and Viet Select's manufacturing overhead cost per pound.c. Calculate the unit product cost of one pound of Kenya Dark and one pound of Viet Select.Complete this question by entering your answers in the tabs below.Required 1A Required 1B Required 2A Required 2BUsing direct labor-hours as the manufacturing overhead cost allocation base, calculate the plantwide predetermined overheadrate.Note: Round your answer to 2 decimal places.Predetermined overhead rateper DLHRequired 2C< Required 1ARequired 1B >

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Description: Do not give image format Java Source, Incorporated, (JSI) roasts, blends, and packages coffee beans for resale. Some of JSI's coffees sell in large volumes,while some newer blends sell in very low volumes. JSI prices its coffees at manufacturing cost

ABC method also known as activity-based costing is a costing method that computes the total cost of…

Business

Accounting

Required: 1. Using direct labor-hours as the manufacturing overhead cost allocation base: a. Calculate the plantwide predetermined overhead rate. b. Calculate the unit product cost of one pound of Kenya Dark and one pound of Viet Select. 2. Using the activity-based absorption costing approach: a. Calculate the total manufacturing overhead cost allocated to Kenya Dark and Viet Select. b. Using the data developed in (2a) above, compute Kenya Dark's and Viet Select's manufacturing overhead cost per pound. c. Calculate the unit product cost of one pound of Kenya Dark and one pound of Viet Select. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 2A Required 2B Using direct labor-hours as the manufacturing overhead cost allocation base, calculate the plantwide predetermined overhead rate. Note: Round your answer to 2 decimal places. Predetermined overhead rate per DLH Required 2C < Required 1A Required 1B >

Required: 1. Using direct labor-hours as the manufacturing overhead cost allocation base: a. Calculate the plantwide predetermined overhead rate. b. Calculate the unit product cost of one pound of Kenya Dark and one pound of Viet Select. 2. Using the activity-based absorption costing approach: a. Calculate the total manufacturing overhead cost allocated to Kenya Dark and Viet Select. b. Using the data developed in (2a) above, compute Kenya Dark's and Viet Select's manufacturing overhead cost per pound. c. Calculate the unit product cost of one pound of Kenya Dark and one pound of Viet Select. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 2A Required 2B Using direct labor-hours as the manufacturing overhead cost allocation base, calculate the plantwide predetermined overhead rate. Note: Round your answer to 2 decimal places. Predetermined overhead rate per DLH Required 2C < Required 1A Required 1B >

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 25P: Taylor Company produces two industrial cleansers that use the same liquid chemical input: Pocolimpio...

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Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 16 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 40 percent of next months sales are in the finished goods inventory. Ingles also purchases sufficient materials to ensure that materials inventory is 60 percent of the following months scheduled production. Ingless sales budget in units for the next quarter is as follows: Ingless ending inventories in units for July 31 are as follows: Required: 1. Calculate the number of tables to be produced during August. 2. Disregarding your response to Requirement 1, assume the required production units for August and September are 2,100 and 1,900, respectively, and the July 31 materials inventory is 4,000 units. Compute the number of table legs to be purchased in August. 3. Assume that Ingles Corporation will produce 2,340 units in September. How many employees will be required for the Assembly Department in September? (Fractional employees are acceptable since employees can be hired on a part-time basis. Assume a 40-hour week and a 4-week month.) (CMA adapted)
Taylor Company produces two industrial cleansers that use the same liquid chemical input: Pocolimpio and Maslimpio. Pocolimpio uses two quarts of the chemical for every unit produced, and Maslimpio uses five quarts. Currently, Taylor has 6,000 quarts of the material in inventory. All of the material is imported. For the coming year, Taylor plans to import 6,000 quarts to produce 1,000 units of Pocolimpio and 2,000 units of Maslimpio. The detail of each products unit contribution margin is as follows: Taylor Company has received word that the source of the material has been shut down by embargo. Consequently, the company will not be able to import the 6,000 quarts it planned to use in the coming years production. There is no other source of the material. Required: 1. Compute the total contribution margin that the company would earn if it could import the 6,000 quarts of the material. 2. Determine the optimal usage of the companys inventory of 6,000 quarts of the material. Compute the total contribution margin for the product mix that you recommend. 3. Assume that Pocolimpio uses three direct labor hours for every unit produced and that Maslimpio uses two hours. A total of 6,000 direct labor hours is available for the coming year. a. Formulate the linear programming problem faced by Taylor Company. To do so, you must derive mathematical expressions for the objective function and for the materials and labor constraints. b. Solve the linear programming problem using the graphical approach. c. Compute the total contribution margin produced by the optimal mix.
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Vollmer Manufacturing makes three components for sale to refrigeration companies. The components are processed on two machines: a shaper and a grinder. The times (in minutes) required on each machine are as follows: The shaper is available for 120 hours, and the grinder for 110 hours. No more than 200 units of component 3 can be sold, but up to 1,000 units of each of the other components can be sold. In fact, the company already has orders for 600 units of component 1 that must be satisfied. The profit contributions for components 1, 2, and 3 are 8, 6, and 9, respectively. a. Formulate and solve for the recommended production quantities. b. What are the objective coefficient ranges for the three components? Interpret these ranges for company management. c. What are the right-hand-side ranges? Interpret these ranges for company management. d. If more time could be made available on the grinder, how much would it be worth? e. If more units of component 3 can be sold by reducing the sales price by 4, should the company reduce the price?
Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10.10 from an outside vendor. Division A needs 11,100 lamps for the coming year. Division B has the capacity to manufacture 49,600 lamps annually. Sales to outside customers are estimated at 38,500 lamps for the next year. Reading lamps are sold at $12.09 each. Variable costs are $6.87 per lamp and include $1.41 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $75,900. Consider the following independent situations. What should be the minimum transfer price accepted by Division B for the 11,100 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 15.25.) Per unit Minimum transfer price accepted by Division B $_ Maximum transfer…
Java Source, Inc., (JSI) buys coffee beans from around the world and roasts, blends, and packages them for resale. Some of JSI’s coffees are very popular and sell in large volumes, while a few of the newer blends sell in very low volumes. JSI prices its coffees at manufacturing cost plus a markup of 25%. For the coming year, JSI’s budget includes estimated manufacturing overhead cost of $2,200,000. JSI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost totals $600,000, which represents 50,000 hours of direct labor time. The expected costs for direct materials and direct labor for one-pound bags of two of the company’s coffee products appear below. Kenya Dark Viet Select Direct materials 4.5 2.90 Direct labor (0.02 hours per bag) 0.34 0.34 JSI’s controller believes that the company’s traditional costing system may be providing misleading cost information. To determine whether or not this is…
Flounder Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10 from an outside vendor. Division A needs 9,000 lamps for the coming year. Division B has the capacity to manufacture 45,000 lamps annually. Sales to outside customers are estimated at 36,000 lamps for the next year. Reading lamps are sold at $12 each. Variable costs are $7 per lamp and include $2 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $72,000. Consider the following independent situations.
A carton manufacturer produces two sizes of carton for a fortune 100 logistics company. The logistics company has agreed to buy the cartons for next 12 months. The carton manufacturer now has tasked their operations manager to identify the number of cartons to produce for each size to achieve maximum revenue. When sold to the logistics company, carton A5 sells for 6 dollars a piece and carton C5 sells for 8 dollars a piece. The carton manufacturer has a labor hours capacity of 8,300 hours and budget for raw material limited to $ 185,580. Carton A5 utilizes 0.09 hours of labor and $2 of material cost per piece whereas, carton C5 utilizes 0.12 hours of labor and $2.75 of material cost per piece. Formulate a LP model and solve in excel solver to calculate the optimal quantities of each type leading to maximizing the revenue and satisfying all constraints.
Guthrie Generators manufactures a solenoid that it uses in several of its products. Management is considering whether to continue manufacturing the solenoids or to buy them from an outside source. The following information is available: 1. The company needs 20,000 solenoids per year. The solenoids can be purchased from an outside supplier at a cost of $15 per unit. 2. The unit cost of manufacturing the solenoids is $20, computed as follows: Direct materials Direct labor Factory overhead: Variable Fixed Total manufacturing costs Cost per unit ($400,000 ÷ 20,000 units) 3. If the company decides not to manufacture the solenoids, it will eliminate all of the raw materials and direct labor costs but only 75 percent of the variable factory overhead costs. 4. If the solenolds are purchased from the outside source, machinery used in the production of solenoids will be sold at its book value. Accordingly, no gain or loss will be recognized. The sale of this machinery would also eliminate $5,000…
The F Inc.’s materials manager is considering the installation of a just-in-time (JIT) inventory system for L-20, one of the chemicals used in the production process. Currently, the chemical is purchased for $30 each pound. The firm uses 4,800 pounds L-20 per year. The controller estimates that it costs $150 to place and receive a typical order of L-20. The annual cost of storing L-20 is $1 per pound. F Inc.’s manufacturing engineering team identifies the following effects of adopting a JIT inventory system: 1) F Inc. will order 100 pounds L-20 each time. 2) The cost of placing an order for L-20 will be reduced to $20. 3) Suppliers would add $4 to the price per pound for frequent deliveries. 4) Currently there is a defect-assessment cost of $120,000 per year. This cost is expected a reduction of 20% under the JIT system. F Inc. requires a 10% annual rate of return on investment Required: From a financial perspective, determine whether it is in the best interest of F to…
Deli's Fudge Factory currently makes fudge for retail and mail order customers. It also offers a variety of roasted nuts. Fudge sales have increased over the past year, so Deli is considering outsourcing the roasted nuts and using the roasting space to make additional fudge. A reliable supplier has quoted a price of £0.85 per pound for the roasted nuts. The following amounts reflect the in-house manufacturing costs per pound for the roasted nuts: Direct materials Direct labour Unit-related support costs Batch-related support costs Product-sustaining support costs Facility-sustaining support costs Total cost per pound £0.50 0.06 0.10 0.04 0.05 0.15 £0.90 Required: Should Deli's Fudge Factory outsource the roasted nuts? Why or why not? Discuss all items that should be considered. a.
Triple X Company manufactures and sells refrigerators. It makes some of the parts for the refrigerators and purchases others. The engineering department believes it might be possible to cut costs by manufacturing one of the parts currently being purchased for $8.25 each. The firm uses 100,000 of these parts each year. The accounting department compiles the followinglist of costs based on engineering estimates:Fixed costs will increase by $50,000.Labor costs will increase by $125,000.Factory overhead, currently running $500,000 per year, may be expected to increase 12 percent. Raw materials used to make the part will cost $600,000.Given the preceding estimates, should Triple X make the part or continue to buy it?