COST ACCOUNTING TTU >IC<
17th Edition
ISBN: 9781323409046
Author: Horngren
Publisher: PEARSON
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Chapter 10, Problem 10.26E
Account analysis method. Gower, Inc., a manufacturer of plastic products, reports the following
| Account | Classification | Amount |
| Direct materials | All variable | $300,000 |
| Direct manufacturing labor | All variable | 225,000 |
| Power | All variable | 37,500 |
| Supervision labor | 20% variable | 56,250 |
| Materials-handling labor | 50% variable | 60,000 |
| Maintenance labor | 40% variable | 75,000 |
| 0% variable | 95,000 | |
| Rent, property taxes, and administration | 0% variable | 100,000 |
Gower, Inc., produced 75,000 units of product in 2017. Gower’s management is estimating costs for 2018 on the basis of 2017 numbers. The following additional information is available for 2018.
- a. Direct materials prices in 2018 are expected to increase by 5% compared with 2017.
- b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 10% in 2018 compared with 2017.
- c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018.
- d. Depreciation costs are expected to increase by 5%, and rent, property taxes, and administration costs are expected to increase by 7%.
- e. Gower expects to manufacture and sell 80,000 units in 2018.
- 1. Prepare a schedule of variable, fixed, and total manufacturing costs for each account category in 2018. Estimate total manufacturing costs for 2018.
Required
- 2. Calculate Gower’s total manufacturing cost per unit in 2017, and estimate total manufacturing cost per unit in 2018.
- 3. How can you obtain better estimates of fixed and variable costs? Why would these better estimates be useful to Gower?
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Account analysis method. Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2017.
Gower, Inc., produced 75,000 units of product in 2017. Gower’s management is estimating costs for 2018 on the basis of 2017 numbers. The following additional information is available for 2018.
Direct materials prices in 2018 are expected to increase by 5% compared with 2017.
Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 10% in 2018 compared with 2017.
Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018.
Depreciation costs are expected to increase by 5%, and rent, property taxes, and administration costs are expected to increase by 7%.
Gower expects to manufacture and sell 80,000 units in 2018.
Menlo Company manufactures and sells a single product. The following information has been provided to you:
Profit and loss account for the year ended 31 Dec 2017:
£
£
£
Sales
3,000,000
Production costs:
Direct materials
300,000
Direct labour
1,387,500
Variable overhead
150,000
Fixed overhead
525,000
Total production costs:
2,362,500
Fixed administration overhead
240,000
Selling and distribution costs:
Sales commission (2% of sales)
60,000
Variable distribution costs
127,500
Fixed
advertising costs
90,000
277,500
2,880,000
Profit
120,000…
Menlo Company manufactures and sells a single product. The following information has been provided to you:
Profit and loss account for the year ended 31 Dec 2017:
£
£
£
Sales
3,000,000
Production costs:
Direct materials
300,000
Direct labour
1,387,500
Variable overhead
150,000
Fixed overhead
525,000
Total production costs:
2,362,500
Fixed administration overhead
240,000
Selling and distribution costs:
Sales commission (2% of sales)
60,000
Variable distribution costs
127,500
Fixed
advertising costs
90,000
277,500
2,880,000
Profit
120,000…
Chapter 10 Solutions
COST ACCOUNTING TTU >IC<
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Ch. 10 - Define learning curve. Outline two models that can...Ch. 10 - Discuss four frequently encountered problems when...Ch. 10 - Prob. 10.13QCh. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - HL Co. uses the high-low method to derive a total...Ch. 10 - A firm uses simple linear regression to forecast...Ch. 10 - In regression analysis, the coefficient of...Ch. 10 - A regression equation is set up, where the...Ch. 10 - What would be the approximate value of the...Ch. 10 - Estimating a cost function. The controller of the...Ch. 10 - Identifying variable-, fixed-, and mixed-cost...Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Account analysis, high-low. Stein Corporation...Ch. 10 - Account analysis method. Gower, Inc., a...Ch. 10 - Prob. 10.27ECh. 10 - Estimating a cost function, high-low method. Lacy...Ch. 10 - Linear cost approximation. Dr. Young, of Young and...Ch. 10 - Cost-volume-profit and regression analysis....Ch. 10 - Regression analysis, service company. (CMA,...Ch. 10 - High-low, regression. May Blackwell is the new...Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - High-low method. Wayne Mueller financial analyst...Ch. 10 - High-low method and regression analysis. Market...Ch. 10 - High-low method; regression analysis. (CIMA,...Ch. 10 - Regression, activity-based costing, choosing cost...Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Cost estimation, cumulative average-time learning...Ch. 10 - Cost estimation, incremental unit-time learning...Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Cost estimation. Hankuk Electronics started...Ch. 10 - Prob. 10.45PCh. 10 - Interpreting regression results, matching time...Ch. 10 - Purchasing department cost drivers, activity-based...Ch. 10 - Purchasing department cost drivers, multiple...
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