Question 2 (This question has 3 items, (a), (b), and (c))Morry Games developed a new play station called AWESOME. Morry Games has a standard cost system to help control itscosts. The following standards have been established for AWESOME.• Direct materials 15 grams per AWESOME.• Standard direct material cost per AWESOME is $10.• Direct labour 1.2 hours per AWESOME.• Standard cost of direct labour is $14.40 per AWESOME.• During May the company produced 9,000 AWESOME units.Production data for May are:• Direct materials: 165,000 grams were purchased at a cost of S104,000; 20,000 grams of this was still in inventory at the endof the month.• Direct labour: 11,400 direct labour hours were worked at a cost of $142,500.Required:(a) Calculate Direct materials price and quantity variances.(b) Calculate Direct labour price and quantity variances.(c) Are the variances computed in (a) and (b) linked? Provide a brief commentary on the variances computed above, includingexplanations regarding the price and the quantity variances for Direct materials, and the price and the quantity variances forDirect labours.

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• Standard direct material cost per AWESOME is $10. • Direct labour 1.2 hours per AWESOME. • Standard cost of direct labour is $14.40 per AWESOME. • During May the company produced 9,000 AWESOME units. Production data for May are: • Direct materials: 165,000 grams were purchased at a cost of S104 of the month. • Direct labour: 11,400 direct labour hours were worked at a cost of S Required: (a) Calculate Direct materials price and quantity variances. (b) Calculate Direct labour price and quantity variances. (c) Are the variances computed in (a) and (b) linked? Provide a brief explanations regarding the price and the quantity variances for Direct Direct labours.

• Standard direct material cost per AWESOME is $10. • Direct labour 1.2 hours per AWESOME. • Standard cost of direct labour is $14.40 per AWESOME. • During May the company produced 9,000 AWESOME units. Production data for May are: • Direct materials: 165,000 grams were purchased at a cost of S104 of the month. • Direct labour: 11,400 direct labour hours were worked at a cost of S Required: (a) Calculate Direct materials price and quantity variances. (b) Calculate Direct labour price and quantity variances. (c) Are the variances computed in (a) and (b) linked? Provide a brief explanations regarding the price and the quantity variances for Direct Direct labours.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 45E: Use the following information for Exercises 5-44 through 5-46: The following six situations at...

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Use the following information for Exercises 5-44 through 5-46: The following six situations at Diviney Manufacturing Inc. are independent. a. A manual insertion process takes 30 minutes and 8 pounds of material to produce a product. Automating the insertion process requires 15 minutes of machine time and 7.5 pounds of material. The cost per labor hour is 12, the cost per machine hour is 8, and the cost per pound of materials is 10. b. With its original design, a gear requires 8 hours of setup time. By redesigning the gear so that the number of different grooves needed is reduced by 50%, the setup time is reduced by 75%. The cost per setup hour is 50. c. A product currently requires 6 moves. By redesigning the manufacturing layout, the number of moves can be reduced from 6 to 0. The cost per move is 20. d. Inspection time for a plant is 16,000 hours per year. The cost of inspection consists of salaries of 8 inspectors, totaling 320,000. Inspection also uses supplies costing 5 per inspection hour. The company eliminated most defective components by eliminating low-quality suppliers. The number of production errors was reduced dramatically by installing a system of statistical process control. Further quality improvements were realized by redesigning the products, making them easier to manufacture. The net effect was to achieve a close to zero-defect state and eliminate the need for any inspection activity. e. Each unit of a product requires 6 components. The average number of components is 6.5 due to component failure, requiring rework and extra components. Developing relations with the right suppliers and increasing the quality of the purchased component can reduce the average number of components to 6 components per unit. The cost per component is 500. f. A plant produces 100 different electronic products. Each product requires an average of 8 components that are purchased externally. The components are different for each part. By redesigning the products, it is possible to produce the 100 products so that they all have 4 components in common. This will reduce the demand for purchasing, receiving, and paying bills. Estimated savings from the reduced demand are 900,000 per year. 5-45 Driver Analysis Refer to the information for Diviney Manufacturing on the previous page. Required: CONCEPTUAL CONNECTION For each situation, identify the possible root cause(s) of the activity cost (such as plant layout, process design, and product design).
A company makes two products (1 and 2). Each product requires time on two machines A and B. The specifications for each product are as follows; Product 1 Product 2 Processing time on machine A (hrs/unit) 2 2 Processing time on machine B (hrs/unit) 1 2 Material and labor cost (Sh./unit) 14 15 Selling price (Sh./unit) 16 18 Maximum possible sale (units) 130 150 The amount of time available on machine A is 360 hrs and on machine B is 260 hrs. Formulate the LP problem, which when solved, would indicate the number of product 1 and 2, which should be sold in order to maximize total…
Question 1.2 Alejandro Kirk Manufacturing produces two types of entry doors: Deluxe and Standard. The assignment basis for support costs has been direct labour dollars. For 2021, Alejandro Kirk the following data for the two products: Deluxe Standard Sales units 50,000 400,000 Sales price per unit $650.00 $475.00 Direct material and labour costs per unit $180.00 $130.00 Manufacturing support costs per unit $80.00 $120.00 Last year, Alejandro Kirk Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information: Activity Cost Driver Cost Total Deluxe Standard Setups # of setups $500,000 500 400 100 Machine related # of machine hours…
2.The company "Chanos Ltd" produces puzzles for adults within the framework of a standardized mass production. The production process uses 2 basic raw materials: cardboard and high quality ink. For the manufacture of a puzzle, half a square meter of cardboard and 0.1 kg of ink are required. The cardboard is inserted at the beginning of the production process and the ink is added at the end by printing the design on the now perforated puzzle. The company uses the cost flow assumption F.I.F.O. to value its inventories. Here are some data for the month of August 20X6: The initial stock of semi-finished on 1/8/20X6 was 2,000 puzzles processed at 20% in terms of conversion costs. The cost of the initial stock amounted to €28,000 in terms of cardboard costs and €35,000 in terms of conversion costs. The conversion cost for the month amounted to € 20,300. The final stock of semi-finished on 31/8/20X6 was 3,000 puzzles processed at 40% in terms of conversion costs. Data are also given…
Please help with the question number 4,5, and 6. Thank you Gigabyte, Inc. manufactures three products for the computer industry: Gismos (product G): annual sales, 8,000 units Thingamajigs (product T): annual sales, 15,000 units Whatchamacallits (product W): annual sales, 4,000 units The company uses a traditional, volume-based product-costing system with manufacturing over-head applied on the basis of direct-labor dollars. The product costs have been computed as follows: Product G Product T Product W Raw material ..........................$ 35.00 $52.50 $17.50 Direct labor 16(.8 hr.at $20) 12(.6 hr at $20) 8(.4 hr at $20) Manufacturing overhead* ......140.00 105.00 70.00 Total product cost ..................$191.00 $169.50 $95.50 *Calculation of predetermined overhead rate: Manufacturing overhead budget: Machine…
Activity Cost Driver Chosen asAllocation Base Conversion Cost Per Unit ofAllocation Base Materials handling Number of parts $1.00 Machining Machine hours 60.00 Packaging Number of finished units 2.00 Each windsock requires three parts and spends five minutes in the machining department. The total cost of direct materials and direct labor is $3.50 per windsock. Gale produces 20,000 windsocks each year and sells them at 140% of cost. The selling price per windsock is: Question 8 options: $13.50. $18.90. $16.10. $88.20.
For situations 1 trough 3, provide the following information for each number:a. An estimate of the non-value-added cost caused by each activityb. The root caused of the activity cost (such as plant layout, process design, and product design)c. The appropriate cost reduction measure: activity elimination, activity reduction, activity sharing,or activity selection Inspection time for a plant is 4,000 hours per year. The cost of inspection consists of salaries of four inspectors, totaling $100,000. Inspection also uses supplies costing $3 per inspection hour. A supplier evaluation program, product redesign, and process redesign reduced the need for inspection by creating a zero-defect environment. Each unit of a product required seven components, the average number of components is 7.3 due to component failure, requiring rework and extra components. By developing relations with the right suppliers and increasing the quality of the purchased component, the average number of components…
Question 10 Cheyenne, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a smartphone. The cost structure to manufacture 19,400 Tri-Robos is as follows. Cost Direct materials ($49 per robot) $950,600 Direct labor ($37 per robot) 717,800 Variable overhead ($6 per robot) 116,400 Allocated fixed overhead ($31 per robot) 600,000 Total $2,384,800 Cheyenne is approached by Tienh Inc., which offers to make Tri-Robo for $112 per unit or $2,172,800.Following are independent assumptions.
Activity Cost Driver Chosen asAllocation Base Conversion Cost Per Unit ofAllocation Base Materials handling Number of parts $1.00 Machining Machine hours 60.00 Packaging Number of finished units 2.00 Each windsock requires three parts and spends five minutes in the machining department. The total cost of direct materials and direct labor is $3.50 per windsock. Gale produces 20,000 windsocks each year and sells them at 140% of cost. The total cost of producing the 20,000 windsocks is: Question 7 options: $160,000. $230,000. $270,000. $1,260,000.
Total and unit cost, decision making: Gayle’s Glassworks makes glass flanges for scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $28 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $28,000 per period. Period (nonmanufacturing) costs associated with flanges are $10,000 per period and are fixed. #2 Assume Gayle’s Glassworks manufactures and sells 5,000 flanges this period. Its competitor, Flora’s Flasks, sells flanges for $10 each. Can Gayle sell below Flora’s price and still make a profit on the flanges? #3 How would your answer to requirement 2 differ if Gayle’s Glassworks made and sold 10,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making?
Question 3: Abdur Rahman has received an order from the neighbor land of FIJI ISLAND Company for the special dairy product he makes. Fiji Island Co asked for 5,000 units of the dairy products. To make the product, Abdur Rahman needs $5 of direct materials per unit , 15 Minutes to make one unit, hourly payment is $12. For the purpose of calculating overhead, the company has estimated 30,000 direct labor hour would be needed this year. Estimated fixed manufacturing overhead $150,000 and variable manufacturing overhead is $4 per hour. During the season, the actual manufacturing overhead of Abdur Rahman Company was $250,000 with total 32,000 direct labor. Required: 3a). Determine the product costs per unit also total product cost for Fiji Company. 3b). Why companies use predetermined overhead costs rather than actual manufacturing overhead costs to apply overhead to jobs.
Required information Skip to question [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Direct Labor-Hours per unit Annual Production Rims 0.60 26,000 units Posts 0.60 84,000 units Additional information about the company follows: Rims require $17 in direct materials per unit, and Posts require $14. The direct labor wage rate is $20 per hour. Rims are more complex to manufacture than Posts and they require special equipment. The ABC system has the following activity cost pools: Activity Cost Pool Activity Measure Estimated Activity Estimated Overhead Cost Rims Posts Total Machine setups Number of setups $ 39,480 80 320 400 Special processing Machine-hours $ 146,160 3,000 0 3,000 General factory Direct labor-hours $ 1,092,000 15,600 50,400 66,000 What us the unit cost ofposts