Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Costs $ 396,000 2,210,000 Activity Drivers Direct material cost Machine-hours Equipment setup 790,000 Production runs Packaging and shipping 420,000 Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows: Products LC-20 $ 540,000 $ 420,000 92,125 75 240,000 Total direct material costs Total direct labor costs Total machine-hours Total number of production runs Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour. LC-50 $ 180,000 $ 210,000 46,000 50 60,000 Required: .. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Required A Required B The intern suggests an ABC system using the cost drivers identified above. What unit product costs will be reported for the two products if the ABC system is used? Note: Do not round intermediate calculations. Direct material costs Direct labor cost Overhead: Material inspection Assembly Equipment setup Packaging and shipping Total costs Number of units Unit cost $ $ LC-20 540,000 $ 420,000 960,000 0 $ LC-50 180,000 210,000 390,000 0 < Required A Required B > Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Costs $ 396,000 2,210,000 Activity Drivers Direct material cost Machine-hours Equipment setup 790,000 Production runs Packaging and shipping 420,000 Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows: Products LC-20 $ 540,000 $ 420,000 92,125 75 240,000 Total direct material costs Total direct labor costs Total machine-hours Total number of production runs Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour. LC-50 $ 180,000 $ 210,000 46,000 50 60,000 Required: .. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Required A Required B The intern suggests an ABC system using the cost drivers identified above. What unit product costs will be reported for the two products if the ABC system is used? Note: Do not round intermediate calculations. Direct material costs Direct labor cost Overhead: Material inspection Assembly Equipment setup Packaging and shipping Total costs Number of units Unit cost $ $ LC-20 540,000 $ 420,000 960,000 0 $ LC-50 180,000 210,000 390,000 0 < Required A Required B >
Expert Answer:
Related Book For
Quantitative Methods for Business
ISBN: 978-0324651751
11th Edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam
Posted Date:
Students also viewed these accounting questions
-
The following information applies to the questions displayed below Juan Diego began the year with a tax basis in his partnership interest of $50,000 During the year, he was allocated $20,000 of...
-
The following information applies to the questions displayed below Dower Corporation prepares its financial statements according to IFRS On March 31, 2021, the company purchased equipment for...
-
Required information The following information applies to the questions displayed The following financial statement information is from five separate companies. Required 1. Answer the following...
-
A car of mass m starts from rest and accelerates so that the instantaneous power delivered to the car has a constant magnitude P. The instantaneous velocity of this car is proportional to : (a) t'P 0...
-
Assume that the United States invests heavily in government and corporate securities of Country K. In addition, residents of Country K invest heavily in the United States. Approximately $10 billion...
-
Vornado took an interest-only mortgage with 60% LTV and 10% interest rate to buy an office building for $10,000,000. The building generates $800,000 of rental income per year and requires a $50,000...
-
Water flows in the system shown in Fig. P3.96. Assume frictionless flow. (a) Calculate the rate \(Q\) at which water must be added at the inlet to maintain the 16-ft height. (b) Calculate the height...
-
JEM Company's comparative balance sheets for 2011 and 2012 are provided. The following additional information is available: a. Net income for the year 2012 (as reported on the income statement) was...
-
Managing employees with personal problems can be a delicate and challenging task. As a manager, it's important to approach these situations with empathy, understanding, and professionalism. It is...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
What is an ETF? How do ETFs differ from open-end stock funds? List and briefly describe the different types of ETFs. List the advantages and disadvantages of ETFs. How Mutual Funds Generate...
-
A US investor bought 2 million lots (1 lot = 100 shares) of BMRI shares for IDR 6,150 per share. After 6 months, BMRI's share price increased to IDR 8,300 per share, and paid a dividend of IDR 100...
-
In October, Carla Vista Company reports 20,600 actual direct labor hours, and it incurs $213,300 of manufacturing overhead costs. Standard hours allowed for the work done is 23,700 hours. The...
-
My name is Holly. I am 45 years old. I was a single parent for about 12 years. I could not afford insurance for myself - it just wasn't in my budget. My kids always came first. If I got sick, I...
-
A debt of $401 due in 4 months and another debt of $638 due in 11 months are both to be paid with a single payment in 8 months. What single payment will pay off the two debts if the interest rate is...
-
Given the following data on your actual cumulative distribution of daily returns, versus normal: Actual Normal Cumulative Cumulative Return Distribution Distribution (0.0460) (0.0404) (0.0348)...
-
Waqa Ltd have set a 5-year life for the proposed nailfile project. Waqa's management have given you the following forecasts of operating cash flows: Sales of nailfiles for the first year are $120...
-
Write a paper about how diet relates to breast cancer in women study design to use: case control study purpose & rationale the purpose of this final project is to utilize the methods and...
-
Vollmer Manufacturing makes three components for sale to refrigeration companies. The components are processed on two machines: a shaper and a grinder. The times (in minutes) required on each machine...
-
If the Albany highway system described in Problem 29 has revised flow capacities as shown in the following network, what is the maximal flow in vehicles per hour through the system? How many vehicles...
-
The Gilbert Air-Conditioning Company is considering the purchase of a special shipment of portable air conditioners manufactured in Japan. Each unit will cost Gilbert $80, and it will be sold for...
-
Summer and winter constellations are different because (a) of the spin of Earth about its polar axis. (b) the night sky faces in opposite directions in summer and winter. (c) of the tilt of Earths...
-
The property of a star that relates to the amount of energy per unit time it is producing is its (a) luminosity. (b) apparent brightness. (c) color. (d) volume. (e) mass.
-
The longest-lived stars are those of (a) low mass. (b) high mass. (c) intermediate mass. (d) infinite mass.
Study smarter with the SolutionInn App