EBK CORNERSTONES OF COST MANAGEMENT
3rd Edition
ISBN: 8220100474972
Author: MOWEN
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 9E
1.
To determine
Compute for Model A and Model B, the ABC product cost.
2.
To determine
Ascertain the average product cost of value stream, if there is a stable product mix and assess the grouping done based on the similarity of the products.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
a)
Classify each cost as fixed, variable or mixed, using production volume as the cost driver.
b)
Use the high-low method to separate mixed costs into their fixed and variable components and prepare the cost formula for each of the mixed costs.
C. If Green Corridor Company expects a production volume of 30,000 bicycles in the coming quarter,
prepare the production cost formula for the quarter and predict the total production cost.
1) Determine the variable cost per unit and the fixed cost using the high-low method. 2) What is the equation of the total mixed cost function?
3) Based on the High-Low method, what is the total production costs if 6,500 units are produced?4) Prepare the scatter diagram and insert the trendline or line of best-fit. Use a scale of 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the yaxis.5) Using the line of best-fit, determine the company’s fixed cost per month and the variable cost per unit. (Use 0 & 5,000 units.)
Answer all please and thanks.
Refer to the pictur ebelow:
Find:
1. Total Cost of Product A under ABC System2. Total Cost of Product B under ABC System3. Selling Price per unit of Product B assuming profit margin of 20% above cost
Chapter 15 Solutions
EBK CORNERSTONES OF COST MANAGEMENT
Ch. 15 - Prob. 1DQCh. 15 - What are the five principles of lean thinking?Ch. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Explain how lean manufacturing is able to produce...Ch. 15 - What role does a demand-pull system have on lean...Ch. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - What is the purpose of assigning facility costs to...Ch. 15 - Why are units shipped used to calculate the...
Ch. 15 - When will the average unit cost be useful for...Ch. 15 - Explain why changes in value-stream profitability...Ch. 15 - Prob. 13DQCh. 15 - Prob. 14DQCh. 15 - What is productivity measurement?Ch. 15 - Prob. 16DQCh. 15 - Prob. 17DQCh. 15 - Discuss the advantages and disadvantages of...Ch. 15 - Prob. 19DQCh. 15 - Prob. 20DQCh. 15 - What is profit-linked productivity measurement and...Ch. 15 - Prob. 22DQCh. 15 - What is the price-recovery component?Ch. 15 - Anderson Company has the following departmental...Ch. 15 - During the week of June 12, Harrison Manufacturing...Ch. 15 - Prob. 3CECh. 15 - Prob. 4CECh. 15 - Prob. 5ECh. 15 - Bienestar Inc., has the following departmental...Ch. 15 - Bienestar, Inc., implemented cellular...Ch. 15 - Henderson, Inc., has just created five order...Ch. 15 - Prob. 9ECh. 15 - Shorts Manufacturing, Inc., has implemented lean...Ch. 15 - Prob. 11ECh. 15 - Prob. 12ECh. 15 - Carsen Company produces handcrafted pottery that...Ch. 15 - Prob. 14ECh. 15 - Prob. 15ECh. 15 - Prob. 16ECh. 15 - Lean manufacturing is characterized by all but one...Ch. 15 - Lean manufacturing uses value streams to produce a...Ch. 15 - A manufacturing cell within a value stream is...Ch. 15 - Total productive efficiency is achieved when both...Ch. 15 - The following information is given for a...Ch. 15 - Sixty employees (all CPAs) of a local public...Ch. 15 - Sixty employees (all CPAs) of a local public...Ch. 15 - Prob. 24PCh. 15 - Continuous improvement is the governing principle...Ch. 15 - Prob. 26PCh. 15 - Prob. 27PCh. 15 - Prob. 28P
Knowledge Booster
Similar questions
- Lillibridge & Friends, Incorporated provides you with the following data for its single product: Sales price per unit Fixed costs (per quarter): Selling, general, and administrative (SG&A) Manufacturing overhead Variable costs (per unit): Direct labor Direct materials Manufacturing overhead SG&A Number of units produced per quarter a. Prime cost per unit b. Contribution margin per unit c. Gross margin per unit d. Conversion cost per unit e. Variable cost per unit Required: Compute the amounts for each of the following assuming that the production levels are within the relevant range if the number of units is 500,000 per quarter. Also calculate if the number of units increases to 600,000 per quarter. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. f. Full absorption cost per unit g. Variable production cost per unit h. Full cost per unit $ 140 1,500,000 4,500,000 $ 17 20 18 14 500,000 units 500,000 units 600,000 units 37.00 $ $ 37.00 55.00 $ 55.00arrow_forwardThe management of Hartman Company is trying to determine the amount of each of two products to produce over the coming planning period. The following information concerns labor availability, labor utilization, and product profitability: a. Develop a linear programming model of the Hartman Company problem. Solve the model to determine the optimal production quantities of products 1 and 2. b. In computing the profit contribution per unit, management does not deduct labor costs because they are considered fixed for the upcoming planning period. However, suppose that overtime can be scheduled in some of the departments. Which departments would you recommend scheduling for overtime? How much would you be willing to pay per hour of overtime in each department? c. Suppose that 10, 6, and 8 hours of overtime may be scheduled in departments A, B, and C, respectively. The cost per hour of overtime is 18 in department A, 22.50 in department B, and 12 in department C. Formulate a linear programming model that can be used to determine the optimal production quantities if overtime is made available. What are the optimal production quantities, and what is the revised total contribution to profit? How much overtime do you recommend using in each department? What is the increase in the total contribution to profit if overtime is used?arrow_forwardLarsen, Inc., produces two types of electronic parts and has provided the following data: There are four activities: machining, setting up, testing, and purchasing. Required: 1. Calculate the activity consumption ratios for each product. 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). When compared with the activity ratios, what can you say about the relative accuracy of a plantwide rate? Which product is undercosted? 3. What if the machine hours were used for the plantwide rate? Would this remove the cost distortion of a plantwide rate?arrow_forward
- Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and storing goods. Receiving and assembly are necessary activities; expediting and storing goods are unnecessary. The following data pertain to the four activities for the year ending 20x1 (actual price per unit of the activity driver is assumed to be equal to the standard price): Required: 1. Prepare a cost report for the year ending 20x1 that shows value-added costs, non-value-added costs, and total costs for each activity. 2. Explain why expediting products and storing goods are non-value-added activities. 3. What if receiving cost is a step-fixed cost with each step being 1,500 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?arrow_forwardLillibridge & Friends, Incorporated provides you with the following data for its single product: Sales price per unit Fixed costs (per quarter): Selling, general, and administrative (SG&A) Manufacturing overhead Variable costs (per unit): Direct labor Direct materials Manufacturing overhead SG&A Number of units produced per quarter a. Prime cost per unit b. Contribution margin per unit c. Gross margin per unit d. Conversion cost per unit e. Variable cost per unit f. Full absorption cost per unit g. Variable production cost per unit h. Full cost per unit Required: Compute the amounts for each of the following assuming that the production levels are within the relevant range if the number of units is 500,000 per quarter. Also calculate if the number of units increases to 600,000 per quarter. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. $ $ $ 160 1,500,000 4,500,000 500,000 units 600,000 units 41.00 $ 41.00 83.00 $ $ $ $ 19 22 20 16 500,000 units…arrow_forwardLillibridge & Friends, Incorporated provides you with the following data for its single product: Sales price per unit Fixed costs (per quarter): Selling, general, and administrative (SG&A) Manufacturing overhead Variable costs (per unit): Direct labor Direct materials Manufacturing overhead SG&A Number of units produced per quarter a. Prime cost per unit b. Contribution margin per unit c. Gross margin per unit d. Conversion cost per unit e. Variable cost per unit f. Full absorption cost per unit Required: Compute the amounts for each of the following assuming that the production levels are within the relevant range if the number of units is 500,000 per quarter. Also calculate if the number of units increases to 600,000 per quarter. Note: Round your answers to 2 decimal places. g. Variable production cost per unit h. Full cost per unit 500,000 units $ $ S $ 50 1,500,000 4,500,000 600,000 units $ 19.00 17.00 $ 13.00 $ 8 11 9 5 500,000 units 19.00 17.00 14.50arrow_forward
- Lillibridge & Friends, Incorporated provides you with the following data for its single product: Sales price per unit Fixed costs (per quarter): Selling, general, and administrative (SG&A) Manufacturing overhead Variable costs (per unit): Direct labor Direct materials Manufacturing overhead SG&A Number of units produced per quarter a. Prime cost per unit b. Contribution margin per unit c. Gross margin per unit d. Conversion cost per unit e. Variable cost per unit f. Full absorption cost per unit g. Variable production cost per unit h. Full cost per unit 500,000 units $50 1,500,000 4,500,000 Required: Compute the amounts for each of the following assuming that the production levels are within the relevant range if the number of units is 500,000 per quarter. Also calculate if the number of units increases to 600,000 per quarter. Note: Round your answers to 2 decimal places. 8 600,000 units 11 9 5 500,000 unitsarrow_forwardThe graphs below represent cost behavior patterns that might occur in acompany's cost structure. The vertical axis represents total cost, and thehorizontal axis represents activity output. Required:For each of the following situations, choose the graph from the group a-1 that best illustrates the cost pattern involved. Also, for each situation,identify the driver that measures activity output. 1. The cost of power when a fixed fee of $500 per month is chargedplus an additional charge of $0.12 per kilowatt-hour used2. Commissions paid to sales representatives. Commissions arepaid at the rate of 5 percent of sales made up to total annual salesof $500,000, and 7 percent of sales above $500,000.3. A part purchased from an outside supplier costs $12 per part for the first 3,000 parts and $10 per part for all parts purchased inexcess of 3,000 units.4. The cost of surgical gloves, which are purchased in incrementsof 100 units (gloves come in boxes of 100 pairs).5. The cost of tuition at a…arrow_forward25: Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Activity Budgeted Activity Cost Activity Base Casting $570,000 Machine hours Assembly 80,000 Direct labor hours Inspecting Setup Materials handling 42,000 Number of inspections Number of setups 38,000 23,750 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total Machine hours 6,000 13,000 19,000 Direct labor hours 3,000 2,000 5,000 Number of inspections 600 400 1,000 Number of setups 300 200 500 Number of loads 450 500 950 Units produced 6,000 3,000 9,000arrow_forward
- Cordova manufactures three types of stained glass windows, cleverly named Products A, B, and C. Information about these products follows: Sales price Variable costs per unit Fixed costs per unit Required number of labor hours Product A Product B Product C Product A $50.00 16.40 6.00 2.00 15,000 units 10,000 units 6,000 units Product B $ 60.00 11.25 6.00 2.50 Cordova currently is limited to 60,000 labor hours per month. Cordova's marketing department has determined the following demand t for its products: Product C $ 90.00 24.40 6.00 4.00arrow_forwarda) Classify each cost element as either fixed, variable, or mixed b) Calculate: (i) the variable production cost per unit and the total fixed production overhead. (ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable components. c) Assuming sales of 5,000 units, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly showing contribution and net income.arrow_forwardThe following data have been extracted from the records of Puzzle Incorporated: Production level, in units Variable costs Fixed costs Mixed costs Total costs Required A Required B Required: a. Calculate the missing costs. b. Calculate the cost formula for mixed cost using the high-low method. c. Calculate the total cost that would be incurred for the production of 12,880 units. d. Identify the two key cost behavior assumptions made in the calculation of your answer to part c. Required C Production level, in units Variable costs Fixed costs Mixed costs Total costs Complete this question by entering your answers in the tabs below. Calculate the missing costs. Note: Do not round intermediate calculations. February 9,200 $ 19,320 ? 16,312 $ 71,532 February 9,200 $ 19,320 $ 2 X 16,312 $ 71,532 Required D August August 20, 240 $? 35,900 ? $ 106,970 Answer is not complete. 20,240 34,255 35,900 52,475 $ 106,970arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningEssentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning