Lang Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Lang Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine maintenance and utility costs increase with the number of machine hours, and indirect labor costs increase with direct labor hours. Facility rent and machine depreciation are fixed, and are the basis of manufacturing capacity. Fixed costs are allocated equally to each unit produced, regardless of model. Currently, Lang uses 80% of its manufacturing capacity. The cost of unused capacity is not assigned to products, but is expensed as a separate line item. For 2020, Lang has budgeted the following: (Click the icon to view the budgeted information.) (Click the icon to view other information.) Read the requirements. Requirement 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. Select the formula you will use, then calculate the cost driver rate. (Round the cost driver rates to the nearest cent, $X.XX. "Machine maint & util" = "Machine maintenance and utility costs". When calculating the cost driver rates for facility rent and depreciation, use a numerator that accounts for the fact that Lang uses only 80% of its manufacturing capacity.) Cost driver rate Requirements 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. 2. Calculate the cost of unused capacity for the year. 4. 3. Calculate the total cost for each model, and the cost per unit for each model. Lang has the opportunity to sublease the unused factory space to a startup company that will be manufacturing surf apparel. None of Lang's machinery will be used. Is there a minimum annual rent that Lang should charge? Are there any other considerations that Lang's management should make prior to offering the space? Print - X Done G Data table Lang Boards Budgeted Costs for the Year Ended December 31, 2020 Direct materials-Basic boards Direct materials-Competition boards Direct manufacturing labor-Basic boards Direct manufacturing labor-Competition boards Machine setup costs Machine maintenance and utility costs Indirect labor costs Facility rent Machine depreciation Print Done $ 276,000 638,400 518,400 777,600 110,000 243,000 648,000 211,250 40,625 X Data table Other information: Units produced Machine hours Number of setups Direct labor-hours Print Basic 4,600 34,000 800 28,800 Done Competition 8,400 47,000 200 43,200 X Lang Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine maintenance and utility costs increase with the number of machine hours, and indirect labor costs increase with direct labor hours. Facility rent and machine depreciation are fixed, and are the basis of manufacturing capacity. Fixed costs are allocated equally to each unit produced, regardless of model. Currently, Lang uses 80% of its manufacturing capacity. The cost of unused capacity is not assigned to products, but is expensed as a separate line item. For 2020, Lang has budgeted the following: (Click the icon to view the budgeted information.) (Click the icon to view other information.) Read the requirements. Requirement 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. Select the formula you will use, then calculate the cost driver rate. (Round the cost driver rates to the nearest cent, $X.XX. "Machine maint & util" = "Machine maintenance and utility costs". When calculating the cost driver rates for facility rent and depreciation, use a numerator that accounts for the fact that Lang uses only 80% of its manufacturing capacity.) Cost driver rate Requirements 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. 2. Calculate the cost of unused capacity for the year. 4. 3. Calculate the total cost for each model, and the cost per unit for each model. Lang has the opportunity to sublease the unused factory space to a startup company that will be manufacturing surf apparel. None of Lang's machinery will be used. Is there a minimum annual rent that Lang should charge? Are there any other considerations that Lang's management should make prior to offering the space? Print - X Done G Data table Lang Boards Budgeted Costs for the Year Ended December 31, 2020 Direct materials-Basic boards Direct materials-Competition boards Direct manufacturing labor-Basic boards Direct manufacturing labor-Competition boards Machine setup costs Machine maintenance and utility costs Indirect labor costs Facility rent Machine depreciation Print Done $ 276,000 638,400 518,400 777,600 110,000 243,000 648,000 211,250 40,625 X Data table Other information: Units produced Machine hours Number of setups Direct labor-hours Print Basic 4,600 34,000 800 28,800 Done Competition 8,400 47,000 200 43,200 X
Expert Answer:
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Posted Date:
Students also viewed these accounting questions
-
Whitewater Adventures manufactures two models of kayaks, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect...
-
Whitewater Adventures manufactures two models of kayaks, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect...
-
Whitewater Adventures manufactures two models of kayaks, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect...
-
In Exercises use the differential equation and the specified initial condition to find y. dy dx || 1 4 - x y(0) = -
-
On July 1, 2011, the consulting firm of Little, Smart, and Quick bought a new computer for $120,000 to help it service its clients more efficiently. The new computer was estimated to have a useful...
-
How much tax will Hanna pay on her qualified dividends and capital gains?
-
Find out the average number of times children in three different classes ask a question each day of the week. What measure of central tendency did you use and why?
-
At September 30, 2016, the accounts of Park Terrace Medical Center (PTMC) include the following: Accounts Receivable...............$ 143,000 Allowance for Bad Debts (credit balance)...... 3,300...
-
Sam, married filing separately without dependents, has $ 3 2 5 , 0 0 0 salary and $ 7 5 , 0 0 0 qualified dividends. Her taxable income is $ 3 8 0 , 0 0 0 . Compute Sam's total tax liability for the...
-
The Ortega Food Company needs to ship 100 cases of hot tamales from its warehouse in San Diego to a distributor in New York City at minimum cost. The costs associated with shipping 100 cases between...
-
Jake's office building is destroyed by a fire on September 15, 2022. Jake receives insurance proceeds on April 15, 2023 in the amount of $300,000. Jake's adjusted basis in the building was $250,000....
-
If you rub a balloon with hair and bring it close to a stream of water in a wash basin, the water gets attracted toward the balloon. Can you predict the charge on the stream of water?
-
Judy, an internal auditor at Fermented Fruits, has found evidence of accounting fraud at the company. She is worried about the repercussions of reporting her firm to the SEC. You remind her that...
-
Loans to executives were prohibited by the Sarbanes-Oxley Act of 2002 because: (a) The board of directors granted huge loans to company officers, and then conveniently authorized forgiveness of the...
-
At 300 K and 1 bar, the equilibrium constant for the following reaction: is reported to be 10. What is the equilibrium constant at 300 K and 10 bar? You may assume ideal gas behavior. A(g) + B(g) C(g)
-
A classmate believes that the image you see in a mirror is on the mirror surface rather than behind the mirror. What is something you can do to convince your classmate he is incorrect?
-
At 5% annual interest, what is the difference in the present and future value of P100 paid at the end of each year for 10 years and P100 paid at thebeginning of each year?
-
Global.asax is used for: a. declare application variables O b. all other answers are wrong O c. declare global variables O d. handle application events
-
Designer Wear operates a chain of 10 retail department stores. Each department store makes its own purchasing decisions. Barry Lee, assistant to the president of Designer Wear, is interested in...
-
Mercantile Bank recently introduced a new bonus plan for its business unit executives. The company believes that current profitability and customer satisfaction levels are equally important to the...
-
Cell Design produces cell phone covers for all makes and models of cell phones. Cell Design sells 1,050,000 units each year at a price of $ 10 per unit and a contribution margin of 40%. A survey of...
-
What are the key characteristics of a model that makes it easily testable?
-
List advantages of stable models.
-
What is the concept behind constructing an analysis pattern by using direct approach?
Study smarter with the SolutionInn App