The Andy Bernard Company produces drywall that can withstand a punch being punched into it and has developed the follcving stand. • Direct materials: 2.5 ounces at $20 per ounce • Direct labor: 1.4 hours at $12.50 per hour • Variable manufacturing overhead: 1.4 hours at $3.50 per hour Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October: • 3,750 units of drywall were produced during the month. • There was no beginning direct materials inventory. • Direct materials purchased: 12,000 ounces for $225,000. • The ending direct materials inventory was 2,000 ounces. • Direct labor-hours worked: 5,600 hours at a cost of $67,200. • Variable manufacturing overhead costs incurred amounted to $18,200. • Variable manufacturing overhead applied to products: $18,375. The labor rate variance for October is: O $2,625 Favorable O $2,625 Unfavorable O $2,800 Favorable O $2,800 Unfavorable

The Andy Bernard Company produces drywall that can withstand a punch being punched into it and has developed the follcving stand. • Direct materials: 2.5 ounces at $20 per ounce • Direct labor: 1.4 hours at $12.50 per hour • Variable manufacturing overhead: 1.4 hours at $3.50 per hour Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October: • 3,750 units of drywall were produced during the month. • There was no beginning direct materials inventory. • Direct materials purchased: 12,000 ounces for $225,000. • The ending direct materials inventory was 2,000 ounces. • Direct labor-hours worked: 5,600 hours at a cost of $67,200. • Variable manufacturing overhead costs incurred amounted to $18,200. • Variable manufacturing overhead applied to products: $18,375. The labor rate variance for October is: O $2,625 Favorable O $2,625 Unfavorable O $2,800 Favorable O $2,800 Unfavorable

Name: Question 16Use the following information for Questions 14 through 19:
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Description: Question 16Use the following information for Questions 14 through 19:The Andy Bernard Company produces drywall that can withstand a punch being punched into it and has developed the follcwing standard• Direct materials: 2.5 ounces at $20 per ounounc

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

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

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

Chapter26: Cost Allocation And Activity-Based Costing

Section: Chapter Questions

Problem 26.4EX

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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).
Production run size and activity improvement Littlejohn, Inc. manufactures machined parts for the automotive industry. The activity cost associated with Part XX-10 is as follows: Activity Activity-Base Usage Activity Rate = Activity Cost Fabrication 250 dlh 80per dlh 20,000 Setup 10 setups 80 per setup 800 Production control 10 prod, runs 30 per prod, run 300 Moving 10 moves 25 per move 250 Total activity cost per unit 21,350 Estimated units of production 500 Activity cost per unit 42.70 Each unit requires 30 minutes of fabrication direct labor. Moreover, part XX-10 is manufactured in production run sizes of 50 units. Each production run is set up, scheduled (production control), and moved as a batch of 50 units. Management is considering improvements in the setup, production control, and moving activities in order to cut the production run sizes by half. As a result, the number of setups, production runs, and mows will double from 10 to 20. Such improvements are expected to speed the companys ability to respond to customer orders. Setup is reengineered so that it takes 60% of the original cost per setup. Production control software will allow production control effort and cost per production run to decline by 60%. Moving distance was reduced by 40%, thus reducing the cost per mow by the same amount. A. Determine the revised activity cost per unit under the proposed changes. B. Did these improvements reduce the activity cost per unit? C. What cost per unit for setup would be required for the solution in (A) to equal the base solution?
See Cornerstone Exercise 20.4. Fisher Company has three sequential processes: cutting, welding, and assembly. Assume that the optimal mix is Component A = 0 units per week; and Component B = 30 units per week. Demand is uniformly spread out over the five-day work week. Fisher requires a 2.5-day buffer. Required: 1. Identify the drummer, the rate of production, the time buffer, and the rope. 2. Illustrate the DBR structure of Fisher Company. 3. What if the Welding Department was allowed or encouraged to produce at capacity? What effect will this have on work-in-process inventories?
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. 5-44 Nonvalue-Added Costs Refer to the information for Diviney Manufacturing on the previous page. Required: Estimate the nonvalue-added cost for each situation.
(Appendix 11A) Manufacturing Cycle Efficiency Kurena Company provided the following information on one of its factories: Maximum units produced in a quarter: 180,000 units Actual units produced in a quarter: 112,500 units Hours of cell production labor in a quarter: 30,000 hours Theoretical cycle time: 10 minutes per unit Actual cycle time: 16 minutes per unit Required: 1. Calculate the amount of processing time per unit and the amount of nonprocessing time per unit. 2. Calculate the MCE (rounded to three significant digits).
Calculate lead time Williams Optical Inc. is considering a new lean product cell. The present manufacturing approach produces a product in four separate steps. The production batch sizes are 45 units. The process time for each step is as follows: Process Step 1 5 minutes Process Step 2 8 minutes Process Step 3 4 minutes Process Step 4 3 minutes The time required to move each batch between steps is 5 minutes. In addition, the time to move raw materials to Process Step 1 is also 5 minutes, and the lime to move completed units from Process Step 4 to finished goods inventory is 5 minutes. The new lean layout will allow the company to reduce the batch sizes from 45 units to 3 units. The time required to move each batch between steps and the inventory locations will be reduced to 2 minutes. The processing time in each step will stay the same. Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the (A) present and (B) proposed production approaches. (Round percentages to one decimal place.)
(Appendix 11A) Manufacturing Cycle Efficiency Ventris Company found that one of its manufacturing cells had actual cycle time of 15 minutes per unit. The theoretical cycle time for this cell was 9 minutes per unit. Required: 1. Calculate the amount of processing time per unit and the amount of nonprocessing time per unit. 2. Calculate the MCE.
(Appendix 3A) Separating Fixed and Variable Costs, Service Setting Louise McDermott, controller for the Galvin plant of Veromar Inc., wanted to determine the cost behavior of moving materials throughout the plant. She accumulated the following data on the number of moves (from 100 to 800 in increments of 100) and the total cost of moving materials at those levels of moves: Required: 1. Prepare a scattergraph based on these data. Use cost for the vertical axis and number of moves for the horizontal axis. Based on an examination of the scattergraph, does there appear to be a linear relationship between the total cost of moving materials and the number of moves? 2. Compute the cost formula for moving materials by using the high-low method. Calculate the predicted cost for a month with 550 moves by using the high-low formula. (Note: Round the answer for the variable rate to three decimal places and the answer for total fixed cost and total cost to the nearest dollar.) 3. CONCEPTUAL CONNECTION Compute the cost formula for moving materials using the method of least squares. (Note: For the method of least squares, round the variable rate to two decimal places and total fixed cost and total cost to the nearest dollar.) Using the regression cost formula, what is the predicted cost for a month with 550 moves? What does the coefficient of determination tell you about the cost formula computed by regression? 4. CONCEPTUAL CONNECTION Evaluate the cost formula using the least squares coefficients. Could it be improved? Try dropping the third data point (300, 3,400), and rerun the regression.
(Appendix 11A) Cycle Time and Velocity Prakesh Company has the following data for one of its manufacturing cells: Maximum units produced in a month: 50,000 units Actual units produced in a month: 40,000 units Hours of production labor in 1 month: 10,000 hours Required: Compute the (1) theoretical cycle time (in minutes), (2) actual cycle time (in minutes), (3) theoretical velocity (in units per hour), and (4) actual velocity (in units per hour).
Chapter 6 question 8 Please help with part A-D Sheffield Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Sheffield, based on performing 2,100 core tests per month. Standard Price Standard Quantity Standard Cost Direct materials $0.50 per pound 5 pounds $2.50 Direct labor $10 per DLH 0.50 DLH 5.00 Variable overhead $9 per DLH 0.50 DLH 4.50 Fixed overhead $16 per DLH 0.50 DLH 8.00 Total standard cost per test $20.00 At the end of March, London reported the following operational results: ● The company actually performed 2,280 core tests during the month. ● 8,500 pounds of direct materials were purchased during the month at a total cost of $5,700. ● 6,200 pounds of direct materials were used to conduct the core tests. ●…
Chapter 6 Question 8 Sheffield Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Sheffield, based on performing 2,100 core tests per month. Standard Price Standard Quantity Standard Cost Direct materials $0.50 per pound 5 pounds $2.50 Direct labor $10 per DLH 0.50 DLH 5.00 Variable overhead $9 per DLH 0.50 DLH 4.50 Fixed overhead $16 per DLH 0.50 DLH 8.00 Total standard cost per test $20.00 At the end of March, London reported the following operational results: ● The company actually performed 2,280 core tests during the month. ● 8,500 pounds of direct materials were purchased during the month at a total cost of $5,700. ● 6,200 pounds of direct materials were used to conduct the core tests. ● 840 direct labor hours…
Question 6: Your company currently produces a range of three products, D, E, and F to which the following details relate for Period 2. D E F Production (units) 1,500 2,500 14,000 Material cost per unit Br. 18 Br. 10 Br. 20 Labor hours per unit 1 3 2 Machine hours per unit 3 2 6 Labor costs are Br. 8 per hour and production overheads are currently absorbed in the conventional system by reference to machine hours. Total production overheads for Period 2 have been analyzed as follows: Set-up cost 327,250 Handling cost 187,000 Machine cost 140,250 Inspection cost 280,500 935,000 Calculate the cost per unit for each product using conventional The introduction of an ABC is being considered and to that end the following volume…