Gordon Company produces custom-made machine parts. A setup activity is required for the batches of parts that it produces. Activity output is measured using setup hours. The value-added standard (SQ) for this activity is zero. On July 1, at the beginning of the fiscal year, 10 setup hours were allowed and used per batch. The standard wage rate for setup labor is $20 per setup hour. During the first quarter of the new fiscal year, the company is planning to implement a new setup method developed by Gordon’s industrial engineers that is expected to reduce setup time by 40 percent. The new procedure was implemented during the first quarter and the improvement expected was realized. Required: 1. What is the setup standard for setup hours and the associated expected cost at the beginning of the first quarter? Setup standard fill in the blank 1 hours per batch Expected cost per batch $fill in the blank 2 The kaizen standard and expected associated cost? Kaizen standard fill in the blank 3 hours per batch Expected cost per batch $fill in the blank 4 2. What is the setup standard for setup hours and the associated cost at the end of the first quarter? Setup standard fill in the blank 5 hours per batch Expected cost per batch $fill in the blank 6 3. What if the new procedure implemented in the first quarter only produced a 30 percent reduction in setup time instead of the expected 40 percent reduction? What would the new maintenance standard and cost be? Maintenance standard fill in the blank 7 hours per batch Standard batch cost $fill in the blank 8
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Gordon Company produces custom-made machine parts. A setup activity is required for the batches of parts that it produces. Activity output is measured using setup hours. The value-added standard (SQ) for this activity is zero. On July 1, at the beginning of the fiscal year, 10 setup hours were allowed and used per batch. The standard wage rate for setup labor is $20 per setup hour. During the first quarter of the new fiscal year, the company is planning to implement a new setup method developed by Gordon’s industrial engineers that is expected to reduce setup time by 40 percent. The new procedure was implemented during the first quarter and the improvement expected was realized.
Required:
1. What is the setup standard for setup hours and the associated expected cost at the beginning of the first quarter?
| Setup standard | fill in the blank 1 | hours per batch |
| Expected cost per batch | $fill in the blank 2 |
The kaizen standard and expected associated cost?
| Kaizen standard | fill in the blank 3 | hours per batch |
| Expected cost per batch | $fill in the blank 4 |
2. What is the setup standard for setup hours and the associated cost at the end of the first quarter?
| Setup standard | fill in the blank 5 | hours per batch |
| Expected cost per batch | $fill in the blank 6 |
3. What if the new procedure implemented in the first quarter only produced a 30 percent reduction in setup time instead of the expected 40 percent reduction? What would the new maintenance
| Maintenance standard | fill in the blank 7 | hours per batch |
| Standard batch cost | $fill in the blank 8 |
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