Assume that you work for an airline unloading luggage from airplanes. Your boss has said that, on average, each airplane contains 100 pieces of luggage. Furthermore, your boss has stated that you should be able to unload 100 pieces of luggage from an airplane in 10 minutes. Today an airplane arrived with 150 pieces of luggage and you unloaded all of it in 13 minutes. After finishing with the 150 pieces of luggage, your boss yelled at you for exceeding the 10 minute allowance for unloading luggage from an airplane.
Required:
How would you feel about being yelled at for taking 13 minutes to unload 150 pieces of luggage? How does this scenario relate to the larger issue of how companies design
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MANAGERIAL ACCOUNTING (LOOSE) W/CONNECT
- Reggie Wilmore has just started a new businessbuilding and installing custom garage organization systems. Reggie builds the cabinets and work benches in his workshop, then installs them in clients garages. Reggie figures his overhead for the coming year will be 12,000. Since his business is labor intensive, he plans to use direct labor hours as his overhead driver. For the coming year, he expects to complete 100 jobs, averaging 25 direct labor hours each. However, he has the capacity to complete 125 jobs averaging 25 direct labor hours each. Required: 1. Four measures of activity level were mentioned in the text. Which two measures is Reggie considering in computing a predetermined overhead rate? 2. Compute the predetermined overhead rates using each of the measures in your answer to Requirement 1. 3. Which one would you recommend that Reggie use? Why?arrow_forwardReggie Wilmore has just started a new businessbuilding and installing custom garage organization systems. Reggie builds the cabinets and work benches in his workshop, then installs them in clients garages. Reggie figures his overhead for the coming year will be 12,000. Since his business is labor intensive, he plans to use direct labor hours as his overhead driver. For the coming year, he expects to complete 100 jobs, averaging 25 direct labor hours each. However, he has the capacity to complete 125 jobs averaging 25 direct labor hours each. Required: 1. What source documents will Reggie need to account for costs in his new business? 2. Suppose Reggies business grows, and he expands his workshop and hires three additional carpenters to help him. What source documents will he need now?arrow_forwardAn order for 50 of a product is processed on work centers A and B. The setup time on A is 45 minutes, and run time is 5 minutes per piece. The setup time on B is 30 minutes,and the run time is 4 minutes per piece. Wait time between the two operations is 8 hours. The move time between A and B is 60 minutes. Wait time after operation B is 8 hours, and the move time into stores is 2 hours. Queue at work center A is 40 hours and at B is 35 hours. Calculate the total manufacturing lead time for the order.arrow_forward
- Paul James is a chrome plater at a local plant. If he plants 300 items or more, he is paid $1.25 each. For less than 300 items, he is paid $0.75 each. What is his total pay if he plates 321 items on Wednesday and 154 items on Thursday?arrow_forwardA service garage uses 204 boxes of cleaning cloths a year. The boxes cost $12 each. The cost to place one order is $15, and the cost to hold one box in inventory for a year is $2.40. Using this information, what is our total holding and ordering cost if we currently order 12 boxes at a time?arrow_forwardThe F Inc.’s materials manager is considering the installation of a just-in-time (JIT) inventory system for L-20, one of the chemicals used in the production process. Currently, the chemical is purchased for $30 each pound. The firm uses 4,800 pounds L-20 per year. The controller estimates that it costs $150 to place and receive a typical order of L-20. The annual cost of storing L-20 is $1 per pound. F Inc.’s manufacturing engineering team identifies the following effects of adopting a JIT inventory system: 1) F Inc. will order 100 pounds L-20 each time. 2) The cost of placing an order for L-20 will be reduced to $20. 3) Suppliers would add $4 to the price per pound for frequent deliveries. 4) Currently there is a defect-assessment cost of $120,000 per year. This cost is expected a reduction of 20% under the JIT system. F Inc. requires a 10% annual rate of return on investment Required: From a financial perspective, determine whether it is in the best interest of F to…arrow_forward
- Stuart Studio, an art studio, prepared a new catalog for the National School of Heavy Equipment, a school run by Gilbert and Donald Shaw. When the artwork was virtually finished, Gilbert Shaw requested Stuart Studio to purchase and supervise the printing of twenty-five thousand catalogs. Shaw told the art studio that payment of the printing costs would be made within ten days after billing and that if the “National School would not pay the full total, he would stand good for the entire bill.” Shaw was chairman of the board of directors of the school, and he owned 100 percent of its voting stock and 49 percent of its nonvoting stock. The school became bankrupt, and Stuart Studio was unable to recover the sum from the school. Stuart Studio then brought an action against Shaw on the basis of his promise to pay the bill. a. What are the arguments that Shaw is not liable on his promise? b. WhataretheargumentsthatShawisliableonhispromise? c. Is Shaw obligated to pay the debt in question?…arrow_forwardAn executive receives an annual salary of P600,000 and his secretary a salary of P180,000. A certain task can be performed by the executive working alone in four hours. If he delegates the task to his secretary it will require him 30 minutes to explain the work and another 45 minutes to check the finished work. Due to the unfamiliarity of the secretary to do the task, it takes her an additional time of 6 hours after being instructed. considering salary cost only, determine the cost of performing the task by working alone and by working with his sectary, if the secretary works P2,400 hours a year and the executive 3,000 hours a year.arrow_forwardYou are a management accountant for Time Treasures Company, whose company has recently signed an outsourcing agreement with Spotless. Inc., a janitorial service company. Spotless will provide all of Time Treasures janitorial services, including sweeping floors, hauling trash, washing windows, stocking restrooms, and performing minor repairs. Time Treasures will be billed at an hourly rate based on the type of service performed. The work of common laborers (sweeping, hauling trash) is to be billed at $8 per hour. More skilled (repairs) and more dangerous work (washing outside windows on the 23rd floor) are to be billed at $18 per hour. Supervisory time is to be billed at $20 per hour. Spotless will submit monthly invoices, which will show the number and types of hours for which Time Treasures is being charged. The outsourcing contract is simple and straightforward. A. What are some of the internal control problems you foresee as a result of our sourcing the janitorial service with this contract? B. Explain recommendations to control risk that would you suggest after reviewing the contract.arrow_forward
- Alard Manufacturing Company has a billing department staffed by four billing clerks. Each clerk is paid 32,000 per year and is able to process 8,000 bills. Last year, 27,360 bills were processed by the four agents. Calculate the unused capacity in terms of number of bills. a. 27,360 b. 4,640 c. 8,000 d. 32,000arrow_forwardGarrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help in organizing its inventory. Due to the steep learning curve required to use the new software, Garrison must decide between hiring two part-time college students or one full-time employee. Each college student would work 20 hours per week, and would earn $1 S per hour. The full-time employee would work 40 hours per week and would earn $15 per hour plus the equivalent of $2 per hour in benefits. Employees are given two polo shirts to wear as their uniform. The polo-shirts cost Garrison $10 each. What are the relevant costs, relevant revenues, sunk costs, and opportunity costs for Garrison?arrow_forwardIngles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 16 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 40 percent of next months sales are in the finished goods inventory. Ingles also purchases sufficient materials to ensure that materials inventory is 60 percent of the following months scheduled production. Ingless sales budget in units for the next quarter is as follows: Ingless ending inventories in units for July 31 are as follows: Required: 1. Calculate the number of tables to be produced during August. 2. Disregarding your response to Requirement 1, assume the required production units for August and September are 2,100 and 1,900, respectively, and the July 31 materials inventory is 4,000 units. Compute the number of table legs to be purchased in August. 3. Assume that Ingles Corporation will produce 2,340 units in September. How many employees will be required for the Assembly Department in September? (Fractional employees are acceptable since employees can be hired on a part-time basis. Assume a 40-hour week and a 4-week month.) (CMA adapted)arrow_forward
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