Estimating production quantities and sales quantities are difficult tasks as a company works to manage its...

  
 
 
 
 

Transcribed Image Text:

Estimating production quantities and sales quantities are difficult tasks as a company works to manage its inventory of both finished goods and raw materials. If successful on those fronts, these companies still need to estimate the costs for these resources each period. Miguel, Inc. produces and sells adhesive phone wallets for smartphones. The product is standardized with the only variation being the color of which 16 shades are available. Because the wallets are adhesive, customers typically buy a new wallet when they upgrade to a new smartphone model. As such, the company expects to see an increase in sales as new phone models are released. In the past, the production manager, Joe, has been efficient at balancing the quantity manufactured and inventory levels. Joe is arguing that the company's direct costs increase over time. You have been asked by the CEO to determine if Joe is correct, and to help estimate the manufacturing costs that support the phone wallet production. Data containing the daily unit costs of direct materials and direct labor used in producing the wallets for the first three months of the year are shown here Date Unit Direct Material Cost Unit Direct Labor Cost Units Manufactured 1-1 1-2 1-3 1-4 1-5 1-6 1-7 1-8 1-9 1-10 1-11 1-12 1-13 1-14 1-15 1-16 1-17 1-18 1-19 1-20 1-21 $2.72 2.74 2.67 2.74 2.74 2.74 2.72 2.72 2.67 2.72 2.67 2.67 2.72 2.72 2.74 2.67 2.67 2.67 2.72 2.72 2.74 $13.33 13.35 13.61 13.35 13.35 13.35 13.32 13.61 13.75 13.32 13.75 13.75 13.32 13.33 13.35 13.75 13.61 13.61 13.32 13.32 13.33 3,733 3,548 3,960 3,615 3,608 3,561 3,743 3,863 4,003 3,756 4,092 4,051 3,818 3,685 3,577 4,090 3,947 3,914 3,748 3,777 3.622 1-22 1-23 1-24 1-25 1-26 1-27 1-28 1-29 1-30 1-31 2-1 2-2 2-3 2-4 2-5 2-6 2-7 2-8 2-9 2-10 2-11 2-12 2-13 2.67 2.67 2.72 2.74 2.72 2.67 2.72 2.72 2.74 2.72 2.67 2.72 2.67 2.67 2.74 2.67 2.67 2.72 2.72 2.67 2.67 2.74 2.74 13.61 13.75 13.32 13.35 13.32 13.61 13.33 13.32 13.35 13.61 13.75 13.33 13.75 13.61 13.33 13.61 13.75 13.32 13.61 13.75 13.75 13.35 13.35 3,934 4,066 3,787 3,597 3,842 3,937 3,693 3,746 3,596 3,874 4,021 3,709 4,061 3,947 3,670 3,910 4,045 3,832 3,889 4,045 4,042 3,539 3,531 2-14 2-15 2-16 2-17 2-18 2-19 2-20 2-21 2-22 2-23 2-24 2-25 2-26 2-27 2-28 3-1 3-2 3-3 3-4 3-5 3-6 3-7 3-8 2.72 2.67 2.74 2.67 2.72 2.74 2.72 2.74 2.72 2.72 2.67 2.74 2.67 2.72 2.72 2.72 2.67 2.67 2.74 2.72 2.72 2.72 2.72 13.32 13.75 13.35 13.75 13.32 13.35 13.33 13.35 13.32 13.32 13.75 13.35 13.61 13.61 13.61 13.32 13.61 13.61 13.35 13.32 13.61 13.32 13.33 3,788 4,082 3,608 4,028 3,800 3,571 3,739 3,531 3,815 3,780 4,064 3,581 3,945 3,878 3,896 3,804 3,964 3,949 3,555 3,812 3,868 3,741 3,693 3-9 3-10 3-11 3-12 3-13 3-14 3-15 3-16 3-17 3-18 3-19 3-20 3-21 3-22 3-23 3-24 3-25 3-26 3-27 3-28 3-29 3-30 3-31 2.74 2.72 2.74 2.67 2.72 2.72 2.67 2.67 2.72 2.72 2.74 2.74 2.67 2.74 2.74 2.74 2.74 2.74 2.67 2.67 2.67 2.67 2.72 13.35 13.32 13.35 13.61 13.33 13.32 13.75 13.75 13.32 13.33 13.35 13.33 13.75 13.35 13.33 13.35 13.35 13.33 13.75 13.75 13.75 13.75 13.32 3,529 3,753 3,584 3,905 3,675 3,819 4,058 4,052 3,759 3,691 3,613 3,645 4,032 3,581 3,666 3,548 3,556 3,665 4,067 4,021 4,046 3,995 3,811 (c1) Address Joe's assumption about how he thinks cost behave. What do you observe when examining the data in the two pivot charts? BIUT, TIE E H P E M 99 O Word(s) Estimating production quantities and sales quantities are difficult tasks as a company works to manage its inventory of both finished goods and raw materials. If successful on those fronts, these companies still need to estimate the costs for these resources each period. Miguel, Inc. produces and sells adhesive phone wallets for smartphones. The product is standardized with the only variation being the color of which 16 shades are available. Because the wallets are adhesive, customers typically buy a new wallet when they upgrade to a new smartphone model. As such, the company expects to see an increase in sales as new phone models are released. In the past, the production manager, Joe, has been efficient at balancing the quantity manufactured and inventory levels. Joe is arguing that the company's direct costs increase over time. You have been asked by the CEO to determine if Joe is correct, and to help estimate the manufacturing costs that support the phone wallet production. Data containing the daily unit costs of direct materials and direct labor used in producing the wallets for the first three months of the year are shown here Date Unit Direct Material Cost Unit Direct Labor Cost Units Manufactured 1-1 1-2 1-3 1-4 1-5 1-6 1-7 1-8 1-9 1-10 1-11 1-12 1-13 1-14 1-15 1-16 1-17 1-18 1-19 1-20 1-21 $2.72 2.74 2.67 2.74 2.74 2.74 2.72 2.72 2.67 2.72 2.67 2.67 2.72 2.72 2.74 2.67 2.67 2.67 2.72 2.72 2.74 $13.33 13.35 13.61 13.35 13.35 13.35 13.32 13.61 13.75 13.32 13.75 13.75 13.32 13.33 13.35 13.75 13.61 13.61 13.32 13.32 13.33 3,733 3,548 3,960 3,615 3,608 3,561 3,743 3,863 4,003 3,756 4,092 4,051 3,818 3,685 3,577 4,090 3,947 3,914 3,748 3,777 3.622 1-22 1-23 1-24 1-25 1-26 1-27 1-28 1-29 1-30 1-31 2-1 2-2 2-3 2-4 2-5 2-6 2-7 2-8 2-9 2-10 2-11 2-12 2-13 2.67 2.67 2.72 2.74 2.72 2.67 2.72 2.72 2.74 2.72 2.67 2.72 2.67 2.67 2.74 2.67 2.67 2.72 2.72 2.67 2.67 2.74 2.74 13.61 13.75 13.32 13.35 13.32 13.61 13.33 13.32 13.35 13.61 13.75 13.33 13.75 13.61 13.33 13.61 13.75 13.32 13.61 13.75 13.75 13.35 13.35 3,934 4,066 3,787 3,597 3,842 3,937 3,693 3,746 3,596 3,874 4,021 3,709 4,061 3,947 3,670 3,910 4,045 3,832 3,889 4,045 4,042 3,539 3,531 2-14 2-15 2-16 2-17 2-18 2-19 2-20 2-21 2-22 2-23 2-24 2-25 2-26 2-27 2-28 3-1 3-2 3-3 3-4 3-5 3-6 3-7 3-8 2.72 2.67 2.74 2.67 2.72 2.74 2.72 2.74 2.72 2.72 2.67 2.74 2.67 2.72 2.72 2.72 2.67 2.67 2.74 2.72 2.72 2.72 2.72 13.32 13.75 13.35 13.75 13.32 13.35 13.33 13.35 13.32 13.32 13.75 13.35 13.61 13.61 13.61 13.32 13.61 13.61 13.35 13.32 13.61 13.32 13.33 3,788 4,082 3,608 4,028 3,800 3,571 3,739 3,531 3,815 3,780 4,064 3,581 3,945 3,878 3,896 3,804 3,964 3,949 3,555 3,812 3,868 3,741 3,693 3-9 3-10 3-11 3-12 3-13 3-14 3-15 3-16 3-17 3-18 3-19 3-20 3-21 3-22 3-23 3-24 3-25 3-26 3-27 3-28 3-29 3-30 3-31 2.74 2.72 2.74 2.67 2.72 2.72 2.67 2.67 2.72 2.72 2.74 2.74 2.67 2.74 2.74 2.74 2.74 2.74 2.67 2.67 2.67 2.67 2.72 13.35 13.32 13.35 13.61 13.33 13.32 13.75 13.75 13.32 13.33 13.35 13.33 13.75 13.35 13.33 13.35 13.35 13.33 13.75 13.75 13.75 13.75 13.32 3,529 3,753 3,584 3,905 3,675 3,819 4,058 4,052 3,759 3,691 3,613 3,645 4,032 3,581 3,666 3,548 3,556 3,665 4,067 4,021 4,046 3,995 3,811 (c1) Address Joe's assumption about how he thinks cost behave. What do you observe when examining the data in the two pivot charts? BIUT, TIE E H P E M 99 O Word(s)

Answer rating: 100% (QA)

Examining the data provided for the daily unit costs of direct materials and direct labor used in pr... View the full answer