The following information is extracted from the cost records of Kitchen Sdn Bhd, manufacturing double stove and single stove: Particulars Double Stove Single Stove Direct Material RM 6 RM 5 Direct Labour 12 hours @ RMO.50 per 8 hours @ RM 0.50 per hour RM 25 hour Selling Price RM 30 Variable Overhead 120% of direct labour Fixed Overhead RM 1,200 The directors want to be acquainted with the desirability of adopting any one of the following alternative sales mixes in the budget for the next period: (a) 150 units of Double Stove and 350 units of Single Stove. (b) 350 units of Double Stove and 150 units of Single Stove. (c) 400 units of Double Stove and 100 units of Single Stove. (d) 100 units of Double Stove and 400 units of Single Stove. (e) 250 units of Double Stove and 250 units of Single Stove. (f) 500 units of Double Stove only. (g) 500 units of Single Stove. REQUIRED: (a) Compute the net profit for each of the above alternatives. (b) Chose the best alternative for the management.

The following information is extracted from the cost records of Kitchen Sdn Bhd, manufacturing double stove and single stove: Particulars Double Stove Single Stove Direct Material RM 6 RM 5 Direct Labour 12 hours @ RMO.50 per 8 hours @ RM 0.50 per hour RM 25 hour Selling Price RM 30 Variable Overhead 120% of direct labour Fixed Overhead RM 1,200 The directors want to be acquainted with the desirability of adopting any one of the following alternative sales mixes in the budget for the next period: (a) 150 units of Double Stove and 350 units of Single Stove. (b) 350 units of Double Stove and 150 units of Single Stove. (c) 400 units of Double Stove and 100 units of Single Stove. (d) 100 units of Double Stove and 400 units of Single Stove. (e) 250 units of Double Stove and 250 units of Single Stove. (f) 500 units of Double Stove only. (g) 500 units of Single Stove. REQUIRED: (a) Compute the net profit for each of the above alternatives. (b) Chose the best alternative for the management.

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

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 69P: (Appendix 3A) Separating Fixed and Variable Costs, Service Setting Louise McDermott, controller for...

See similar textbooks

Similar questions

Question 2 Two products, A and B, are made using similar equipment and methods. The data for last period are:Product A Product BUnits produced 6 000 8 000Labour hours per unit 1 2Machine hours per unit 4 2Set-ups in period 15 45Orders handled in the period 12 60Overheads for Period $Relating to production set-up 179 000Relating to order handling 30 000Relating to machine activity 55 000 264 000 A. Calculate the overheads to be absorbed per unit of each product, based on:i. absorption costing using labour hour absorption rate. ii. an ABC approach using suitable cost drivers. B. Give TWO (2) advantages and TWO (2) disadvantages of the ABC System.
Question 2 Like Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard cost per unit Actual costs used in production of 12,000 units Direct materials 1.80 feet at $6.00 per foot 24,000 feet purchased at a total cost of $139,800, used only 21,000 feet in production Direct labor 1.8 hours at $18.00 per hour 22,800 hours at $17.40 per hour. Variable overhead 1.8 hours at $10.00 per hour 22,800 hours at a total cost of $250,800 Required: 1, Compute the total standard costs and total actual costs for May’s production. How much is the difference in the total cost and unit cost? (Actual material costs should include actual costs of the materials used in production.) 2, Compute the following variances for May: a, Materials quantity and price variances.b, Labor efficiency and rate variances.c, Variable overhead…
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…
Question 1: Assume the following information pertaining to Star Company: Prime costs $ 202,000 Conversion costs 235,000 Direct materials used 89,900 Beginning work in process 104,300 Ending work in process 83,800 Total manufacturing cost is calculated to be: Multiple Choice $324,900. $33,000. $112,100. $347,100. $122,900.
Question No.5 Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers. Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours XX YY Cost per pool 60 20 Rs.16,000 20 80 Rs.13,000 50 70 Rs.2,400 2,000 500 Rs.20,000 Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead costs to product XX and product YY using activity-based costing. Compute the overhead rate using machine hours under the functional-based costing system. Allocate the overhead cost to Product XX and YY using the functional-based costing system overhead rate calculated in part ©.
Question 6.4 Krum Lawn Equipment has five departments, of which Casting and Finishing are producing departments. Maintenance, Product Movement, and Inspection are service departments. The distribution of the service departments is as follows: Service Costs Services provided to: Maint. Prod. Move. Insp. Cast. Finish. Maintenance $84,000 5% 25% 50% 20% Product movement 160,000 10% 5 45 40 Inspection 38,000 15 5 20 60 Required Use the direct method to allocate the service departments' costs. Prepare a schedule showing the total costs allocated to each…
QUESTION 3 (17)Mvete Limited is an established company in the manufacturing industry. The company is manufacturing a very successful product, namely Vete12. The following cost structure is given to you, the newly appointed Trainee Cost Accountant, to advise management on the different levels of production: At the current level of 15 000 units produced and sold:Direct material R20 per unit Direct labour R375 000Indirect material R5 per unit Indirect labour (includes the production supervisors’ salary of R240 000. The remainder is R5.50 per unit R352 500 Other manufacturing overheads (all variable) R12.50 per unit Depreciation charge PPE (production plant and machinery) R375 000Selling and administrative expenses: • Variable selling expenses R10.25 per unit• Fixed selling expenses R5 per unit • Administrative expenses (all fixed) R7 per unit Required a) Calculate at the three (3) different production levels of: • 15 000 units (current level of production)• 20 000 units,• 12 000 units i.…
Exercise 04-8 Using the plantwide overhead rate to assess prices LO P1 Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimal places.) Process Activity Overhead Cost Driver Quantity Components Changeover $ 458,500 Number of batches 750 Machining 300,400 Machine hours 7,670 Setups 228,000 Number of setups 20 $ 986,900 Finishing Welding $ 181,600 Welding hours 4,100 Inspecting 233,000 Number of inspections 760 Rework 60,500 Rework orders 160 $ 475,100…
Last question 4) The company uses normal costing with two direct-cost categories: Direct materials Direct manufacturing labor Furthermore, the company uses two manufacturing overhead cost pools: Machining department with machine- hours as the allocation base Assembly department with direct manufacturing labor costs as the allocation base. The budget for the plant in 2020 is as follows: Production plant Machine department Assembly department Manufacturing overhead costs 13 597 500 12 271 500 Direct manufacturing labor costs 1 455 000 6 075 000 Direct manufacturing labor-hours 54 000 22 500 Machine-hours 277 500 55 500 What is the budgeted manufacturing overhead rate in the machining and the assembly department? Overhead is the direct cost involved in the production process of the business of the company Calculation of budgeted manufacturing overhead rate in machine department: Budgeted manufacturing…
PROBLEM 1 FIGHTING Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor hours (DLHs). The company has two products, H16Z and P25P, about which it has provided the following data: H16Z P25P Direct materials per unit P10.20 P50.50 Direct labor per unit P8.40 P25.20 Direct labor-hours per unit 0.40 1.20 Annual production 30,000 10,000 The company’s estimated total manufacturing overhead for the year is P1,464,480 and the company’s estimated total direct labor-hours for the year is 24,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Estimated Overhead Cost Supporting direct labor (DLHs) P 552,000 Setting…
3 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: 5 ints 00:40:40 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Activity Cost Pool Purchase orders Rework requests Product testing Machine related Estimated Overhead Cost $ 170,000 374,400 350,000 1,150,000 $2,044,400 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Rate per order per request per test per MH Deluxe 1,000 600 5,000 18,000 Activity Regular 1,500 1,200 12,500 28,000 Total 2,500 1,800 17,500 46,000 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the…
(Appendix 4B) Assigning Support Department Costs by Using the Direct Method Sanjay Company manufactures a product in a factory that has two producing departments, Assembly and Painting, and two support departments, S1 and S2. The activity driver for S1 is square footage, and the activity driver for S2 is number of machine hours. The following data pertain to Sanjay: Support Departments Producing Departments S1 S2 Assembly Painting Direct costs $200,000 $140,000 $115,000 $96,000 Normal activity: Square footage — 500 1,875 625 Machine hours 337 — 3,200 12,800 Required: 1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios—one for Assembly and the other for Painting.) Round your answers to two decimal places. Assembly Painting S1 fill in the blank 1 fill in the blank 2 S2 fill in the blank 3 fill in the blank 4 2. Allocate the support department…