MANAGERIAL ACCOUNTING F/MGRS.
5th Edition
ISBN: 9781259969485
Author: Noreen
Publisher: RENT MCG
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Chapter 11B, Problem 11B.5P
1.
To determine
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
Amount charged by maintenance department to forming department and assembly departments.
2.
To determine
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
Amount that should be charged by maintenance department for spending variance and not to forming and assembly departments.
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Lewisville CorporationIn order to better match cost with revenues, Lewisville Corporation distributes its service department overhead costs to producing departments. Information for April is presented here.
Maintenance
Utilities
Overhead costs incurred
$18,700
$9,000
Service provided to:
Maintenance Dept.
10%
Utilities Dept.
20%
Producing Dept. A
40%
30%
Producing Dept. B
40%
60%
Assume that Lewisville Corporation distributes service department overhead costs based on the algebraic method. What would be the formula to determine the total maintenance costs?
Group of answer choices
M = $18,700 + .10U
M = $9,000 + .20U
M = $18,700 + .30U + .40A + .40B
M = $27,700 + .40A + .40B
Tasman Products, Limited, of Australia has a Maintenance Department that services the equipment in the company’s Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below.
Data for the Maintenance Department follow:
Budget
Actual
Variable costs for lubricants
$ 355,200*
$ 455,760
Fixed costs for salaries and other
$ 216,000
$ 232,600
*Budgeted at $24 per machine-hour.
Data for the Forming and Assembly Departments follow:
Percentage of Peak-Period Capacity Required
Machine-Hours
Budget
Actual
Forming Department
63%
9,800
11,800
Assembly Department
37%
5,000
4,000
Total
100%
14,800
15,800
The level of fixed costs in the Maintenance Department is determined by peak-period requirements.
Required:
1. How much Maintenance…
Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 16,400 units of the part that are needed every year.
Per Unit
Direct materials
$ 3.60
Direct labor
$ 4.30
Variable overhead
$ 7.30
Supervisor's salary
$ 8.00
Depreciation of special equipment
$ 8.60
Allocated general overhead
$ 5.60
An outside supplier has offered to make the part and sell it to the company for $32.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $22,400 of these allocated general overhead costs would be avoided.
Required:
a. Prepare a report that shows the financial impact of buying part…
Chapter 11B Solutions
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