MANAGERIAL ACCOUNTING
17th Edition
ISBN: 9781264374069
Author: Garrison
Publisher: MCG
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Chapter 12, Problem 12P
1a.
To determine
The utilization rate is a performance indicator used to make plans and determine the company's success. It is used by manufacturing companies. The utilization rate of equipment can be increased by avoiding machine breakdowns and reducing average setup times.
:
The utilization rate.
2a.
To determine
The difference between the output power and input power is termed loss. The utilization loss can occur due to regular unplanned maintenance, machine breakdown, or higher average setup times.
:
The utilization loss during the week.
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Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7-
10)
[The following information applies to the questions displayed below.]
Celestial Products, Inc., has decided to introduce a new product, which can be manufactured by either a computer-
assisted manufacturing system or a labor-intensive production system. The manufacturing method will not affect the
quality of the product. The estimated manufacturing costs by the two methods are as follows:
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
Problem 7-44 Part 1
Computer-Assisted
Manufacturing System
Computer-assisted manufacturing system
Labor-intensive production system
0.5DLH @ $19.50
0.5DLH @ $10.50
Break-Even Point
7.80
9.75
5.25
$3,810,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
units
units
Labor-Intensive
Production System
The company's marketing…
Exercise 11-6 (Algo) Managing a Constrained Resource [LO11-6]
Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's products appears below:
Recliner
Sofa
Love Seat
Selling price per unit
$ 1,360
$ 1,885
$ 1,240
Variable cost per unit
$ 800
$ 1,300
$ 900
Upholstery labor-hours per unit
8
hours
13
hours
4
hours
Required:
1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate per hour should the company be willing to pay to keep the upholstery shop open after normal working hours?
2. A small nearby upholstering company has offered to…
Ql:
The costs listed below relate to a variety of different decision situations.
Cost
Unavoidable fixed overhead
Decision
1
Eliminate an unprofitable segment
2
Direct labor
Make or buy
Equipment replacement
Sell or process further
Accepting a special order
3
Original cost of old equipment
Joint production costs
Opportunity cost
4
5
Segment manager's salary
Cost of new equipment
Incremental production costs
Eliminate an unprofitable segment
(manager will be terminated)
Equipment replacement
Sell or process further
6
7
8
Equipment replacement (the amount
of materials required does not
change)
Purchase or lease a building
9
Direct materials
10
Rent expense
Instructions
For each cost listed above, indicate if it is relevant or not to the related decision. For those
costs determined to be irrelevant, briefly explain why
Chapter 12 Solutions
MANAGERIAL ACCOUNTING
Ch. 12 - Prob. 1QCh. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - Prob. 10Q
Ch. 12 - Prob. 1AECh. 12 - Prob. 2AECh. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21C
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