CUSTOM COST ACCT 2521 SWP W/ ACCESS
17th Edition
ISBN: 9781323674116
Author: Pearson
Publisher: Pearson Custom Publishing
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Textbook Question
Chapter 20, Problem 20.36P
Supply-chain effects on total relevant inventory cost. Couture Jeans orders high-quality denim fabric from two different suppliers: Designer Fabrics and Cannon Cotton. Couture would like to use only one of the suppliers in the future. Due to variations in quality, Couture would need to inspect 20% of Designer’s 30-yard bolts (rolls) and 30% of Cannon’s. The following data refer to costs associated with the two suppliers.
| Designer | Cannon | |
| Number of orders per year | 50 | 50 |
| Annual bolts demanded | 2,000 | 2,000 |
| Price per bolt | $ 200 | $ 195 |
| Ordering cost per order | $ 150 | $ 200 |
| Inspection cost per bolt | $ 30 | $ 30 |
| Average inventory level | 20 | 20 |
| Expected number of stockouts | 10 | 10 |
| Stockout cost of rush order | $ 20 | $ 15 |
| Estimated number of jeans returned by customers because of defective fabric | 100 | 200 |
| Cost of fixing jeans returned by customers because of defective fabric | $ 25 | $ 25 |
| Opportunity cost of investment | 15% | 15% |
| Other carrying costs per bolt per year | $ 10 | $ 10 |
- 1. What is the relevant cost of purchasing from Designer Fabrics and Cannon Cotton?
Required
- 2. What factors other than cost should Couture Jeans consider?
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Supply-chain effects on total relevant inventory cost. Couture Jeans orders high-quality denim fabric from two different suppliers: Designer Fabrics and Cannon Cotton. Couture would like to use only one of the suppliers in the future. Due to variations in quality, Couture would need to inspect 20% of Designer’s 30-yard bolts (rolls) and 30% of Cannon’s. The following data refer to costs associated with the two suppliers.
ABC and CVP Analysis: Multiple Products
Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:
Expected sales (in cases)
Selling price per case.
Direct labor hours
Machine hours
Receiving orders
Packing orders
Material cost per case
$49
Direct labor cost per case
$12
The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as
fixed or variable with respect to direct labor hours.
Fixed
$
Direct labor benefits
Machine costs
Receiving department
Packing department
Total costs
Rose Violet
51,000 10,200
$100
36,750
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52
98
All depreciation
211,000
212,500
149,000
$572 500
$83
6,400
2,700
24
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Chapter 20 Solutions
CUSTOM COST ACCT 2521 SWP W/ ACCESS
Ch. 20 - Why do better decisions regarding the purchasing...Ch. 20 - Name six cost categories that are important in...Ch. 20 - What assumptions are made when using the simplest...Ch. 20 - Give examples of costs included in annual carrying...Ch. 20 - Give three examples of opportunity costs that...Ch. 20 - What are the steps in computing the cost of a...Ch. 20 - Why might goal-congruence issues arise when...Ch. 20 - JIT purchasing has many benefits but also some...Ch. 20 - What are three factors causing reductions in the...Ch. 20 - You should always choose the supplier who offers...
Ch. 20 - Prob. 20.11QCh. 20 - What are the main features of JIT production, and...Ch. 20 - Distinguish inventory-costing systems using...Ch. 20 - Describe three different versions of backflush...Ch. 20 - Discuss the differences between lean accounting...Ch. 20 - The order size associated with the...Ch. 20 - Prob. 20.17MCQCh. 20 - Prob. 20.18MCQCh. 20 - Lyle Co. has only one product line. For that line,...Ch. 20 - Just-in-time inventory assumes all of the...Ch. 20 - Economic order quantity for retailer. Wonder Line...Ch. 20 - Economic order quantity, effect of parameter...Ch. 20 - EOQ for a retailer. The Fabric World sells fabrics...Ch. 20 - EOQ for manufacturer. Sk8 Company produces...Ch. 20 - Sensitivity of EOQ to changes in relevant ordering...Ch. 20 - JIT production, relevant benefits, relevant costs....Ch. 20 - Backflush costing and JIT production. Grand...Ch. 20 - Backflush costing, two trigger points, materials...Ch. 20 - Backflush costing, two trigger points, completion...Ch. 20 - Prob. 20.30PCh. 20 - Prob. 20.31PCh. 20 - Prob. 20.32PCh. 20 - Prob. 20.33PCh. 20 - JIT purchasing, relevant benefits, relevant costs....Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Backflush costing and JIT production. The Acton...Ch. 20 - Backflush, two trigger points, materials purchase...Ch. 20 - Backflush, two trigger points, completion of...Ch. 20 - Lean accounting. Reliable Security Devices (RSD)...Ch. 20 - JIT production, relevant benefits, relevant costs,...
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