CengageNOWv2, 1 term Printed Access Card for Hansen/Mowen’s Cornerstones of Cost Management, 4th
4th Edition
ISBN: 9781305970762
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 18, Problem 1CE
Ventana Window and Wall Treatments Company provides draperies, shades, and various window treatments. Ventana works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Ventana’s income statement for last year is as follows:
Ventana wants to find a markup on cost of goods sold that will allow them to earn about the same amount of profit on each job as was earned last year.
Required:
- 1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as last year? (Round the percentage to two significant digits.)
- 2. A customer orders draperies and shades for a remodeling job. The job will have the following costs:
What is the price that Ventana will quote given the markup percentage calculated in Requirement 1? (Round the price to the nearest dollar.)
- 3. What if Ventana wants to calculate a markup on direct materials cost, since it is the largest cost of doing business? What is the markup on direct materials cost that will maintain the same profit as last year? (Round the percentage to two significant digits.) What is the bid price Ventana will use for the job given in Requirement 2 if the markup percentage is calculated on the basis of direct materials cost? (Round to the nearest dollar.)
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
M & J Mechanical sells and services plumbing, heating, and air conditioning systems. M & J's cost accounting system tracks two cost categories:
direct labor and direct materials. M & J uses a time-and-materials pricing system, with direct labor marked up 100% and direct materials marked
up 40% to recover indirect costs of support staff, support materials, and shared equipment and tools and to earn a profit.
Data table
During a hot summer day, the central air conditioning in Susan Lee's home stops working. M & J technician Sam Austen arrives at
Lee's home and inspects the air conditioner. He considers two options: replace the compressor or repair it. The cost information
available to Austen follows:
Repair option
Replace option
Labor rate
Labor
7 hrs.
1 hrs.
$40 per hour
Materials
$160
$280
X
Big Boomers makes custom clubs for golfers. Most of the work is done by hand and with small tools used by craftsmen. Customers are quoted a price in advance of their clubs being manufactured. To produce clubs at a profit, management must have a thorough understanding of product costs. Jeff Ranck, manager of the business, is using direct labor hours as the activity base for allocating overhead costs. He estimated the following amounts at the beginning of 2022: Estimated total overhead. .$190,000Estimated direct labor hou .16,000 hours The following information is available for job number 17, which was started and completed in February 2022: - Direct materials used$1200- Direct labor used$600(corresponding to 50 direct labor hours) Prepare journal entries to: a. Record all the manufacturing costs charged to job 17 . b. Record the completion of job 17. c. Record the cash sale of job 17 in its entirety at a selling price of13%of its manufacturing cost. Record in a separate entry the…
Markup on Cost, Job Pricing
Ventana Window and Wall Treatments Company provides draperies, shades, and various window treatments. Ventana works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Ventana’s income statement for last year is as follows:
Ventana wants to find a markup on cost of goods sold that will allow them to earn about thesame amount of profit on each job as was earned last year.Required:1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as lastyear? (Round the percentage to two significant digits.)
2. A customer orders draperies and shades for a remodeling job. The job will have the following costs:
Direct materials $1,230Direct labor 250Applied overhead 175Total cost $1,655
What is the price that Ventana will quote given the markup percentage calculated in Requirement 1? (Round the price to the…
Chapter 18 Solutions
CengageNOWv2, 1 term Printed Access Card for Hansen/Mowen’s Cornerstones of Cost Management, 4th
Ch. 18 - Define price elasticity of demand. Give an example...Ch. 18 - What are the features of a perfectly competitive...Ch. 18 - How do you calculate the markup on cost of goods...Ch. 18 - Prob. 4DQCh. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - What is price discrimination? Is it legal?Ch. 18 - Prob. 8DQCh. 18 - Prob. 9DQCh. 18 - Suppose that Alpha Company has four product lines,...
Ch. 18 - How does absorption costing differ from variable...Ch. 18 - What are some advantages and disadvantages of...Ch. 18 - Prob. 13DQCh. 18 - Prob. 14DQCh. 18 - Describe the product life cycle. How do unit-level...Ch. 18 - Ventana Window and Wall Treatments Company...Ch. 18 - Kaune Food Products Company manufactures canned...Ch. 18 - Pattison Products, Inc., began operations in...Ch. 18 - Refer to Cornerstone Exercise 18.3. Required: 1....Ch. 18 - Saginaw Company is a garden products wholesale...Ch. 18 - Iliff, Inc., produces and sells two types of...Ch. 18 - Iliff, Inc., produces and sells two types of...Ch. 18 - Refer to Cornerstone Exercise 18.6. Required: 1....Ch. 18 - Budgeted unit sales for the entire countertop oven...Ch. 18 - Prob. 10ECh. 18 - Prob. 11ECh. 18 - Prob. 12ECh. 18 - Prob. 13ECh. 18 - Many different businesses employ markup on cost to...Ch. 18 - Flaherty, Inc., has just completed its first year...Ch. 18 - During its first year of operations, Snobegon,...Ch. 18 - Prob. 17ECh. 18 - Otero Fibers, Inc., specializes in the manufacture...Ch. 18 - Data for Torleson Company are as follows:...Ch. 18 - Eastman, Inc., manufactures and sells three...Ch. 18 - Prob. 21ECh. 18 - The following information pertains to three...Ch. 18 - Thebes Company had the following information: What...Ch. 18 - Banwood Company has the following information for...Ch. 18 - Jasmine Companys expected sales were 2,000 units...Ch. 18 - Prob. 26PCh. 18 - Snyder Company produced 90,000 units during its...Ch. 18 - The following information pertains to Vladamir,...Ch. 18 - Jellison Company had the following operating data...Ch. 18 - San Mateo Optics, Inc., specializes in...Ch. 18 - Haysbert Company provides management services for...Ch. 18 - Sulert, Inc., produces and sells gel-filled ice...Ch. 18 - Prob. 33PCh. 18 - Dana Baird was manager of a new Medical Supplies...Ch. 18 - Bill Fremont, division controller and CMA, was...Ch. 18 - Dantrell Palmer has just been appointed manager of...Ch. 18 - Prob. 37PCh. 18 - Porter Insurance Company has three lines of...Ch. 18 - Porter Insurance Company has three lines of...Ch. 18 - Olin Company manufactures and distributes...Ch. 18 - Shannon, Inc., has two divisions. One produces and...Ch. 18 - Prob. 42P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Please use the information from this problem for these calculations. After grouping cost pools and estimating overhead and activities, Box Springs determined these rates: Box Springs estimates there will be four orders in the next year, and those jobs will involve: What is the total cost of the jobs?arrow_forwardMarvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. A consultant has analyzed the delivery service using activity- based costing methods and identified four activities. Data on these activities follow. Activity Processing order Loading truck Delivering merchandise Processing invoice Total overhead Order value Number of orders Number of items Number of invoices Cost Driver Number of orders Number of items Number of orders Number of invoices Two of Marvin's customers are City Diner and Le Chien Chaud. Data for orders and deliveries to these two customers follow. City Diner Le Chien Chaud $75,000 $90,000 110 1,500 150 Required A Cost Driver Volume 52 600 12 Cost $ 75,000 150,000 90,000 72,000 $387,000 Required B City Diner Le Chien Chaud Driver Volume 5,000 orders 100,000 items Required: a. What would the delivery charge for each…arrow_forwardRoper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs. A. Wood used to produce desks ($125.00 per desk) B. Production labor used to produce desks ($15 per hour) C. Production supervisor salary ($45,000 per year) D. Depreciation on factory equipment ($60,000 per year) E. Selling and administrative expenses ($45,000 per year) F. Rent on corporate office ($44,000 per year) G. Nails, glue, and other materials required to produce desks (varies per desk) H. Utilities expenses for production facility I. Sales staff commission (5% of gross sales)arrow_forward
- The Write Way manufactures double sided pens- a pen on one side, a highlighteron the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year-end. Team members are very familiar with absorbtion costing, as they have been evaluating gross margin amounts and percentages for years. They are lesss keen on how fixed-MOH impacts the income statment, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variase is written off to COGS.Theoretical level - 80,000 units Practical level - 60,000 units Normal level - 50,000 units Actual production - 65,000 units Sales Volume - 60,000 units Budgeted fixed-MOH cost - $240,000 Budgeted DM cost - $2.25 per unit Budgeted DL cost -$1.30 per unit Budgeted…arrow_forwardWheeler's Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow: Bike parts Factory machinery depreciation Factory supervisor salaries Factory direct labor Factory supplies Factory property tax Advertising cost Administrative salaries Administrative-related depreciation Total expected costs Required: 1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $11.91 per hour. 2. Determine the amount of applied overhead if 18,600 actual hours are worked in the upcoming year. Required 1 Required 2 Complete this question by entering your answers in the tabs below. $ 341,800 61,500 140,000 211,998 Predetermined Overhead Rate 39,400 33,750 22,500 55,000 19, 200 $925,148 Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $11.91 per hour. Note: Round your answer to 2 decimal…arrow_forwardJose Ruiz manages a car dealer’s service department. His department is organized as a cost center. Costs for a recent quarter are shown below. List the costs that would appear on a responsibility accounting report for the service department.arrow_forward
- there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Activity for the Year 13,500 hundred square feet 65,000 miles 1,900 jobs Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) Not applicable The total cost of operating the company for the year is $369,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost Activity Measure Square feet cleaned (00s) Miles driven Number of jobs Wages Cleaning…arrow_forwardOberti Guitar Company makes high-quality customized guitars. Oberti uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $300,000 and that 20,000 direct labor hours would be worked. At year-end, Anthony, the company's founder and CEO, gives you the following information regarding Oberti's operations. 1. The beginning balances in the inventory accounts were: Raw Materials Inventory $8,000 Work in Process Inventory $26,000 Finished Goods Inventory $32,000 2. During the year, the company purchased raw materials costing $97,000. All purchases were made on account. 3. The production department requisitioned $100,000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials. 4. The company used 21,000 direct labor hours at a cost of $14 per hour during the year (credit…arrow_forwardMake a Decision: Analyze Antolini Enterprises' Job Costs Antolini Enterprises produces men's sports coats that are sold by popular department stores. Each retail order is treated as a job that accumulates materials, labor, and overhead costs for a batch of sports coats. Management has obtained data on the labor costs for four selected jobs over a six-month period. Each selected job represents a similar style and size of sports coat. The data are as follows: Count Direct Labor Hours Direct Labor Rate per Hour Total DirectLabor Cost Job 107 11 5.06 $15.00 70.40 Job 125 15 7.65 15.00 108.00 Job 160 17 9.52 15.00 132.60 Job 192 9 3.69 18.00 58.50 a. Determine the direct labor cost per unit for each job. b. Interpret the trend in per-unit labor cost. c. Determine the direct labor hours per sports coat. d. Interpret what may be happening with Job 192. Be sure to show your work.arrow_forward
- Decorative Doors Ltd produces two types of doors: interior and exterior. The company’s costing system has two direct-cost categories (materials and labour) and one indirect-cost pool. The costing system allocates indirect costs on the basis of machine-hours. Recently, the owners of Decorative Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Decorative Doors production for the most recent year is as follows: Particulars Interior Exterior Units sold 3200 1800 Selling price $125 $200 Direct material cost per unit $30 $45 Direct production labour cost per hour5 $16 $16 Direct production labour-hours per unit 1.50 2.25 Production runs 40 85 Material moves 72 168 Machine set-ups 45 155 Machine-hours 5500 4500 Number of inspections 250 150 The owners have heard of other companies in the industry that are now…arrow_forwardJean Sharpe decides to gather additional data to identify the cause of overhead costs and figure out which products are most profitable. She notices that $30,000 of the overhead originated from the equipment used. She decides to incorporate machine-hours into the overhead allocation base to determine the effect on product profitability. Almond Dream requires 2 machine-hours per case, Krispy Krackle requires 7 hours per case, and Creamy Crunch requires 6 hours per case. Additionally, Jean notices that the $15,000 per month spent to rent 10,000 square feet of factory space accounts for almost 22 percent of the overhead. The assignment of square feet is 1,000 to Almond Dream, 4,000 to Krispy Krackle, and 5,000 to Creamy Crunch. Jean decides to incorporate this into the allocation base for the rental costs. Because labor-hours are still an important cost driver for overhead, Jean decides that she should use labor-hours to allocate the remaining $24,500. CBI still plans to produce 1,000…arrow_forwardJean Sharpe decides to gather additional data to identify the cause of overhead costs and figure out which products are most profitable. She notices that $30,000 of the overhead originated from the equipment used. She decides to incorporate machine-hours into the overhead allocation base to determine the effect on product profitability. Almond Dream requires 2 machine-hours per case, Krispy Krackle requires 7 hours per case, and Creamy Crunch requires 6 hours per case. Additionally, Jean notices that the $15,000 per month spent to rent 10,000 square feet of factory space accounts for almost 22 percent of the overhead. The assignment of square feet is 1,000 to Almond Dream, 4,000 to Krispy Krackle, and 5,000 to Creamy Crunch. Jean decides to incorporate this into the allocation base for the rental costs. Because labor-hours are still an important cost driver for overhead, Jean decides that she should use labor-hours to allocate the remaining $24,500. CBI still plans to produce 1,000…arrow_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 Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY