Lurvey, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for
Question:
Lurvey, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2014.
Account | Classification | Amount |
Direct materials | All variable | $320,000 |
Direct manufacturing labor | All variable | 240,000 |
Power | All variable | 40,000 |
Supervision labor | 20% variable | 68,000 |
Materials-handling labor | 40% variable | 60,000 |
Maintenance labor | 45% variable | 80,000 |
Depreciation | 0% variable | 88,000 |
Rent, property taxes, and administration | 0% variable | 125,000 |
Lurvey, Inc., produced 80,000 units of product in 2014. Lurvey's management is estimating costs for 2015
on the basis of 2014 numbers. The following additional information is available for 2015
a. | Direct materials prices in 2015 are expected to increase by 88% compared with 2014. | ||||||
b. | Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 44% in 2015 compared with 2014. | ||||||
c. | Power rates and wage rates for supervision, materialshandling, and maintenance are not expected to change from 2014 to 2015. | ||||||
d. | Depreciation costs are expected to increase by 99%, and rent, property taxes, and administration costs are expected to increase by 77%. | ||||||
e. | Lurvey expects to manufacture and sell 90,000 units in 2015.
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Management and Cost Accounting
ISBN: 9780618924035
4th edition
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, George Foster