EBK MANAGERIAL ACCOUNTING: THE CORNERST
7th Edition
ISBN: 9781337516150
Author: Heitger
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Textbook Question
Chapter 2, Problem 20BEA
Use the following information for Brief Exercises 2-19 and 2-20:
Slapshot Company makes ice hockey sticks. Last week, direct materials (wood, paint, Kevlar, and resin) costing $32,000 were put into production. Direct labor of $28,000 (10 workers × 200 hours × $14 per hour) was incurred. Manufacturing overhead equaled $60,000. By the end of the week, the company had manufactured 500 hockey sticks.
Brief Exercise 2-20 Prime Cost and Conversion Cost
Refer to the information for Slapshot Company on the previous page.
Required:
- 1. Calculate the total prime cost for last week.
- 2. Calculate the per-unit prime cost.
- 3. Calculate the total conversion cost for last week.
- 4. Calculate the per-unit conversion cost.
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Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows:
Standard Hours
Standard Rate per Hour
Standard Cost
18 minutes
$ 17.00
$ 5.10
During August, 5,750 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $102,350 for the month.
Please help with the following:
A) What is the standard labor-hours allowed (SH) to makes 20,000 Jogging Mates?
B) What is the standard labor cost allowed (SH × SR) to make 20,000 Jogging Mates?
C) What is the labor spending variance?
D) What is the labor rate variance and the labor efficiency variance?
E) The budgeted variable manufacturing overhead rate is $4 per direct labor-hour. During August, the company incurred $21,850 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.
Picture It Inc. manufactures customized wooden frames. The direct materials needed to construct the frames are wood, glass, and cardboard. Picture It has 22 employees
who work for 40 hours in a work week and are each paid $17 per hour. The company produced and sold 900 frames in the month of September.
During the month of September the following purchases were made to produce the 900 frames:
Wood-4000 ft. at $1.20/ft.
Glass-400 pieces at $5.60/piece
Cardboard-500 pieces at $0.50/piece
Required:
1. Calculate the total product cost for the month. Assume that all employees worked for 4 weeks in September and that the company incurred $55,000 as manufacturing
overhead costs.
2. Calculate the per-unit cost. Round your answer to two decimal places.
3. Calculate the gross margin for the month of September assuming that the company sells each frame for $250.
The manager of a crew that installs wood floors has tracked the crew’s output over the past several weeks. Each worker works 40 hours per week, and earns $21 per hour. The wholesale cost of lumber to the company is $6 per square foot, and the company charges its customers $15 per square foot of flooring installed. The firm’s overhead rate is 150%.
Week Crew Size Lumber Used (sq. ft) Flooring Installed (sq ft)
1 4 480 420
2 2 250 238
a. Calculate labor productivity for each of the weeks shown. Use the best measure of output and labor available.
b. Now calculate multifactor productivity for each of the weeks shown. Explain your results imply in terms of dollars of output
Chapter 2 Solutions
EBK MANAGERIAL ACCOUNTING: THE CORNERST
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