The following information relates to Questions 1 to 2. The management accountant of a furniture manufacturer is developing a standard for the labour cost of one massage chair. When operating at peak efficiency, a skilled worker will take 21 hours to produce assemble one massage chair and 20 minutes to package one massage chair. However, due to the complexity of manufacturing the chair, even a skilled worker who is highly efficient often needs another 2.0 hr to adjust the tools, re-oil relevant machinery and rework some parts of the chair prior to packaging. A skilled worker is paid $40 per hour which excludes on-costs of 20 per cent. Question1 If the company adopts perfection standards, what is the standard labour cost for one massage chair? Round to 2 dec places if required. so Question 2 Assume that for every 100 massage chairs assembled, 25 massage chairs will be defective and will have to discarded. If the company adopts perfection standards, recalculate the standard labour cost for one massage chair. Round to 2 dec places if required.
Q: The company uses ABC and has determined the following activities, cost drivers and activity rates…
A: Under ABC costing, the activities which trigger overheads are identified and cost are calculated…
Q: Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: The following six situations at Diviney Manufacturing Inc. are independent.a. A manual insertion…
A: You have asked multiple questions which are completely different as each situation is different…
Q: Katrina Design has decided to experiment with two alternative manufacturing approaches, identified…
A: Total Productivity Ratio: The productivity ratio is a measurable statistic that quantifies…
Q: Joha, an accountant for Jones, Inc., has decided to estimate the fixed and variable components…
A: The high low method is used to separate the mixed cost into variable cost per unit and fixed costs.
Q: Jobs, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a…
A: Make or buy decision is the decision that is associated with the manufacturing the product or…
Q: Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production…
A: Hey, since there are multiple sub-parts posted, we will answer first three sub-parts. If you want…
Q: NUBD manufactures specialty components for the electronics industry in a highly labor intensive…
A: 1 batch=80 units, total batches=8 the usual learning curve model is y=a(x^b) y = Average time per…
Q: Justin, an ME with Dynamic Castings, has been asked to make a preliminary estimate of the total…
A: Information Provided: Materials: 3000 tons @$45.90 per ton Machinery: 1500 hours at $120 per hour…
Q: A new product is being designed by an engineering team at Golem Security. Several managers and…
A: Given Selling Price per unit = $132 per unit Profit per unit = 0.20 of selling price per unit
Q: Wonder-Tire Service completed 200 tire changes, 10 brake jobs, and 24 alignments in an 10- hour day…
A: Labor productivity seems to be a metric for measuring labor production that is used in both industry…
Q: Athens Company is conducting a time-driven activity-based costing study in its Engineering…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: Jonathan Macintosh is a highly successful Pennsylvania orchardman who has formed his own company to…
A: High-low method: In the high-low method, the semi variable-cost approximation is calculated by…
Q: Woodland Corporation has developed the following activity cost information for its manufacturing…
A: Activity cost is the method of costing which identifies the activities in the organization as well…
Q: Upside Down, Incorporated designs custom storage spaces to eliminate clutter in both residential and…
A: ABC analysis or Activity-based costing is defined as one of the modern methods of distributing the…
Q: [The following information applies to the questions displayed below.] The Platter Valley factory of…
A: The study of variances between actual behavior and predicted or planned behavior in budgeting or…
Q: Antz is a custom manufacturer of electronic circuit boards. Antz develops bids for jobs based on an…
A:
Q: Home Model Deluxe Model Pro Model $ 80 19 20 $ 65 Selling price Dir ect material Dir ect labor ($10…
A: Contribution margin is the difference between the sales price and variable cost of a product. It…
Q: Mariah Enterprises makes a variety of consumer electronic products. Its camera manufacturing plant…
A: Labour productivity is the efficiency of labour it divides output with the labour inputs.…
Q: Cullumber Inc. manufactures and distributes three types of water skis: beginner, intermediate, and…
A: Overhead expense refers to the expenses that are not directly associated with the production of the…
Q: Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production…
A: Formulation-
Q: Sheridan, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan…
A: The differential analysis is performed to analyze the two different alternatives available for the…
Q: Nisan is making over 45,000 cars per year and decided to manufacture and sell three comparable cars…
A: Total Over heads = £ 572,000 Total machine hours…
Q: Chips, Inc. has developed a new production process to manufacture its product. The new process is…
A: Y = aXb Here, Y = Cumulative Average Time Per Unit a = Time taken to produce first unit i.e. 100…
Q: From your readings and videos, you learned about cost estimation using the hig low method. A company…
A: The high low method is used to separate the fixed cost and variable cost from the mixed cost.
Q: Q.What is the budgeted cost of unused capacity?
A:
Q: Cassidy Manning is the assistant controller at LeMar Packaging, Inc., a manufacturer of cardboard…
A: Ethics implies the arrangement of rules that the association ought to follow. While in business,…
Q: Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to…
A: Step 1: Calculate the activity rate for each cost pools.
Q: Erie Company manufactures a mobile fitness device called a Jogging Mate. The company uses standards…
A: Computation of standard labor hours allowed to make 20,000 Jogging mates: Standard hours required =…
Q: difference in allocation between the two approaches
A: Plantwide overhead rate = Total estimated overhead costs/Total direct labor costs Total estimated…
Q: Having joined the company as a fresh graduate , the CFO call you to her office an gave you a report…
A: GIVEN Having joined the company as a fresh graduate, the CFO call you to her office an gave you a…
Q: Antz is a custom manufacturer of electronic circuit boards. Antz develops bids for jobs based on an…
A: Overheads based on Labor Hours Job 1 ( 2,50,000 x 0.50 x 700/1300) = 67,308 Job 2 (2, 50,000 x 0.50…
Q: In certain cases, experience will indicate the best time to perform certain operations to maintain…
A: Answer - Part 1 - Calculation of Cost per piece - ( 200 pieces) Particular Amount Piece…
Q: The Salsa Division of the Spicy Foods Company has provided you with the following information at a…
A: Following is the answer to the given question
Q: Anton believes his company's overhead costs are driven (affected) by the number of machine hours…
A: Overheads are considered as fixed and common expenses that should be allocated to the products based…
Q: mpany has established standard costs for the cabinet department in which one size of a single…
A: Direct materials varianceDirect material variance is a measure that determines the difference…
Q: Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production…
A: Allocation of Overhead to each product line by using traditional costing system with Machine Hour as…
Q: Mabbut Company has the following departmental manufacturing layout for one of its plants:…
A: Production rate measures the quantity of products that can be manufactured during a given period of…
Q: An industrial engineer is tasked to determine the best production rate for a new type of casting in…
A: Formulas Profit = Total Revenue - Total Cost Revenue = No. of Casting * Selling price per…
Q: Oakwood Company produces maple bookcases. The following information is available for the production…
A: 1.
Q: Please use the following information and use it to complete a few calculations, and answer questions…
A: The short-run shut down is a circumstance in which a company shuts down its operation in the short…
Q: Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to…
A: Activity cost pools: A list of overhead categories that represents a cost associated with an…
Q: Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a…
A: Part (a) Overhead rate using the traditional (plantwide) approach Standard Customs Total…
Q: Compute the overhead rates using the activity-based costing approach. Machining $ per machine…
A: “Since you have posted a question with multiple sub-parts, we will solve three subparts for you. To…
Step by step
Solved in 3 steps
- Mabbut Company has the following departmental manufacturing layout for one of its plants: A consulting firm recommended a value stream with the following manufacturing cell: Required: 1. Calculate the total time it takes to produce a batch of 10 units using the traditional departmental manufacturing layout. 2. Using cellular manufacturing, how much time is saved producing the same batch of 10 units? Assuming the cell operates continuously, what is the production rate? Which process controls this production rate? 3. Assume the processing time of Welding is reduced to 6 minutes, while the times of the other processes stay the same. What is the production rate now, and how long will it take to produce a batch of 10 units if the cell is in a continuous production mode?Gumbrecht Company has the following departmental manufacturing layout for one of its plants: A consulting firm has recommended a value stream with the following manufacturing cell: Required: 1. Calculate the total time it takes to produce a batch of 20 units using the traditional departmental manufacturing layout. 2. Using cellular manufacturing, how much time is saved producing the same batch of 20 units? Assuming the cell operates continuously, what is the production rate? Which process controls this production rate? 3. Assume the processing time of Casting is reduced to 9 minutes, while the times of the other processes stay the same. What is the production rate now, and how long will it take to produce a batch of 20 units if the cell is in a continuous production mode?Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
- Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Silven produces two models of cell phones with the following expected activity demands: 1. Determine the total overhead assigned to each product using the four activity drivers. 2. Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in proportion to their costs. 3. Using ABC as the benchmark, calculate the percentage error and comment on the accuracy of the reduced system. Explain why this approach may be desirable.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. 5-46 Type of Activity Management Refer to the information for Diviney Manufacturing on the previous page. Required: For each situation, identify the cost reduction measure: activity elimination, activity reduction, activity sharing, or activity selection.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.
- 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 local picnic table manufacturer has budgeted the following overhead costs: They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Recent success has yielded an order for 1,500 tables. Determine how much the job would cost given the following activities, and assuming an hourly rate for direct labor of $25 per hour:Assume that at the beginning of 20x2, Cicleta trained the 2 assembly workers in a new approach that had the objective of increasing the efficiency of the assembly process. Cicleta also began moving toward a JIT purchasing and manufacturing system. When JIT is fully implemented, the demand for expediting is expected to be virtually eliminated. It is expected to take two to three years for full implementation. Assume that receiving cost is a step-fixed cost with steps of 1,500 orders. The other three activities employ resources that are acquired as used and needed. At the end of 20x2, the following results were reported for the four activities: Required: 1. Prepare a trend report that shows the non-value-added costs for each activity for 20x1 and 20x2 and the change in costs for the two periods. Discuss the reports implications. 2. Explain the role of activity reduction for receiving and for expediting. What is the expected value of SQ for each activity after JIT is fully implemented? 3. What if at the end of 20x2, the selling price of a competing product is reduced by 27 per unit? Assume that the firm produces and sells 20,000 units of its product and that its product is associated only with the four activities being considered. By virtue of the waste-reduction savings, can the competitors price reduction be matched without reducing the unit profit margin of the product that prevailed at the beginning of the year? If not, how much more waste reduction is needed to achieve this outcome? In this case, what price decision would you recommend?
- Bienestar, Inc., implemented cellular manufacturing as recommended by a consultant. The production flow improved dramatically. However, the company was still faced with the competitive need to improve its cycle time so that the production rate is one bottle every four minutes (15 bottles per hour). The cell structure is shown below; the times above the process represent the time required to process one unit. Required: 1. How many units can the cell produce per hour (on a continuous running basis)? 2. How long does it take the cell to produce one unit, assuming the cell is producing on a continuous basis? 3. What must happen so that the cell can produce one bottle every four minutes or 15 per hour, assuming the cell produces on a continuous basis?Rene is working with the operations manager to determine what the standard labor cost is for a spice chest. He has watched the process from start to finish and taken detailed notes on what each employee does. The first employee selects and mills the wood, so it is smooth on all four sides. This takes the employee 1 hour or each chest. The next employee takes the wood and cuts it to the proper size. This takes 30 minutes. The next employee assembles and sands the chest. Assembly takes 2 hours. The chest then goes to the finishing department. It takes 1.5 hours to finish the chest. All employees are cross-trained so they are all paid the same amount per hour, $17.50. A. What are the standard hours per chest? B. What is the standard cost per chest for labor?Evans, Inc., has a unit-based costing system. Evanss Miami plant produces 10 different electronic products. The demand for each product is about the same. Although they differ in complexity, each product uses about the same labor time and materials. The plant has used direct labor hours for years to assign overhead to products. To help design engineers understand the assumed cost relationships, the Cost Accounting Department developed the following cost equation. (The equation describes the relationship between total manufacturing costs and direct labor hours; the equation is supported by a coefficient of determination of 60 percent.) Y=5,000,000+30X,whereX=directlaborhours The variable rate of 30 is broken down as follows: Because of competitive pressures, product engineering was given the charge to redesign products to reduce the total cost of manufacturing. Using the above cost relationships, product engineering adopted the strategy of redesigning to reduce direct labor content. As each design was completed, an engineering change order was cut, triggering a series of events such as design approval, vendor selection, bill of materials update, redrawing of schematic, test runs, changes in setup procedures, development of new inspection procedures, and so on. After one year of design changes, the normal volume of direct labor was reduced from 250,000 hours to 200,000 hours, with the same number of products being produced. Although each product differs in its labor content, the redesign efforts reduced the labor content for all products. On average, the labor content per unit of product dropped from 1.25 hours per unit to one hour per unit. Fixed overhead, however, increased from 5,000,000 to 6,600,000 per year. Suppose that a consultant was hired to explain the increase in fixed overhead costs. The consultants study revealed that the 30 per hour rate captured the unit-level variable costs; however, the cost behavior of other activities was quite different. For example, setting up equipment is a step-fixed cost, where each step is 2,000 setup hours, costing 90,000. The study also revealed that the cost of receiving goods is a function of the number of different components. This activity has a variable cost of 2,000 per component type and a fixed cost that follows a step-cost pattern. The step is defined by 20 components with a cost of 50,000 per step. Assume also that the consultant indicated that the design adopted by the engineers increased the demand for setups from 20,000 setup hours to 40,000 setup hours and the number of different components from 100 to 250. The demand for other non-unit-level activities remained unchanged. The consultant also recommended that management take a look at a rejected design for its products. This rejected design increased direct labor content from 250,000 hours to 260,000 hours, decreased the demand for setups from 20,000 hours to 10,000 hours, and decreased the demand for purchasing from 100 component types to 75 component types, while the demand for all other activities remained unchanged. Required: 1. Using normal volume, compute the manufacturing cost per labor hour before the year of design changes. What is the cost per unit of an average product? 2. Using normal volume after the one year of design changes, compute the manufacturing cost per hour. What is the cost per unit of an average product? 3. Before considering the consultants study, what do you think is the most likely explanation for the failure of the design changes to reduce manufacturing costs? Now use the information from the consultants study to explain the increase in the average cost per unit of product. What changes would you suggest to improve Evanss efforts to reduce costs? 4. Explain why the consultant recommended a second look at a rejected design. Provide computational support. What does this tell you about the strategic importance of cost management?