Speciaky Products Inc., manufactures household items sold at trade shows. The items classified as cither Trinkets...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Speciaky Products Inc., manufactures household items sold at trade shows. The items classified as cither Trinkets or Widgets, are manufactured on a common asembly line. Other than indirect labor (discused furnther below), the plant operates at full capucity. The current cost accounting system allocates all overhend to the two products on the basis of machine hours. The following information applies to the month of July: Trinkets Widgets 35 Total Number of Batches Produced 80 Number of Units 300 350 2750 1775 230 Number of Machine Hours 1600 175 160 Number of Inspections Number Engineering Changes 70 3 4 Direct Labor Salary & Benefits per Unit Direct Material per Unit S14 The General Ledger aho shows that the following amounts were spent on indirect resource: Indirect Labor Salaries and Benefits Computer Resources Uilities & Mic. Other $36,000 S12000 $25.000 S73,000 A. REQUIRED: Using the current cost accounting system, what cost per unit would be reported for the two products for the month of July? Trinket s unit Widget S /unit В. The current method for allocating overhend to the products is no longer acceptable. The production manager has heard about activity-based costing and has assembled some information for use in refining the current system. With the help of the accounting department, the manager has been able to establish the following information related to the key activities that consume the indirect resources: The indirect labor time is spent in the following proportions: Re-tooling before each batch of products 25% Engineering Changes Inspecting Finished Products 25% Idle Time 25% 25% • Plant management would like to lay off a number of employees to eliminate the idle time, but unsuccessful negotiations have prevented such action so far. Computer Resources are used entirely for production planning, and vary with the number of batches in a given period. Utilities and Misc. Other Costs are almost entirely associated with running the machines, and so they tend to vary with the number of machine hours. REQUIRED: Design an Activity-Based Costing System, bused on the provided information, and based on this system, detemine the cost per unit for each product line for July. Show your calculations on the next page. Trinket S. unit Widget S unit с. REQUIRED: Does fhis fim have a problem with product cost cross subsidization? Explain briefly. Speciaky Products Inc., manufactures household items sold at trade shows. The items classified as cither Trinkets or Widgets, are manufactured on a common asembly line. Other than indirect labor (discused furnther below), the plant operates at full capucity. The current cost accounting system allocates all overhend to the two products on the basis of machine hours. The following information applies to the month of July: Trinkets Widgets 35 Total Number of Batches Produced 80 Number of Units 300 350 2750 1775 230 Number of Machine Hours 1600 175 160 Number of Inspections Number Engineering Changes 70 3 4 Direct Labor Salary & Benefits per Unit Direct Material per Unit S14 The General Ledger aho shows that the following amounts were spent on indirect resource: Indirect Labor Salaries and Benefits Computer Resources Uilities & Mic. Other $36,000 S12000 $25.000 S73,000 A. REQUIRED: Using the current cost accounting system, what cost per unit would be reported for the two products for the month of July? Trinket s unit Widget S /unit В. The current method for allocating overhend to the products is no longer acceptable. The production manager has heard about activity-based costing and has assembled some information for use in refining the current system. With the help of the accounting department, the manager has been able to establish the following information related to the key activities that consume the indirect resources: The indirect labor time is spent in the following proportions: Re-tooling before each batch of products 25% Engineering Changes Inspecting Finished Products 25% Idle Time 25% 25% • Plant management would like to lay off a number of employees to eliminate the idle time, but unsuccessful negotiations have prevented such action so far. Computer Resources are used entirely for production planning, and vary with the number of batches in a given period. Utilities and Misc. Other Costs are almost entirely associated with running the machines, and so they tend to vary with the number of machine hours. REQUIRED: Design an Activity-Based Costing System, bused on the provided information, and based on this system, detemine the cost per unit for each product line for July. Show your calculations on the next page. Trinket S. unit Widget S unit с. REQUIRED: Does fhis fim have a problem with product cost cross subsidization? Explain briefly.
Expert Answer:
Answer rating: 100% (QA)
Amount in Method of Costing Used Cost per Unit Trinkets Widgets Tradition... View the full answer
Related Book For
Marketing The Core
ISBN: 978-0078028922
5th edition
Authors: Roger A. Kerin, Steven W. Hartley, William Rudelius
Posted Date:
Students also viewed these accounting questions
-
Temporal Method Pasquale Company is a manufacturer of oil drilling equipment located in Canada. The company is 90% owned by a U.S. parent company. The accounting department of Pasquale Company...
-
Key macroeconomic factors affecting the cost of tourism goods and services include all but which of the following: Interest rates Inflation The exchange rate Direct taxes Indirect taxes
-
Exercise 7-18 On July 1, 2014, Agincourt Inc. made two sales. 1. It sold land having a fair value of $901,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of...
-
The IQ and VIQ are tools insurance producers use to learn more about internal assumptions regarding factors that ultimately control policy performance. They have information in all of the following...
-
A gasoline line is connected to a pressure gage through a double-U manometer, as shown in Fig. P1-112 on the next page. If the reading of the pressure gage is 370 kPa, determine the gage pressure of...
-
Determine the product of inertia of the shaded area with respect to the x and y axes. 1 in. y 2 in. y = 0.25x X
-
The MINITAB commands will create a normal scores plot from observations that were set in C1. (MINITAB uses a variant of the normal scores, \(m_{i}\), that we defined.) Construct a normal scores plot...
-
Thomas Technologies Corporation (TTC) is an engineering services company based in Calgary. He companys Class B common shares are listed on the Toronto Stock Exchange. He Class A common shares are all...
-
Design a Moore FSM to detect if an input sequence is divisible by 5. Each cycle a new bit comes as input towards LSB (e.g. if the current sequence is '1011' and the input is '0', the new sequence is...
-
Laurman, Inc. is considering a new project and has provided the details of the project. The Controller has asked you to compute various capital budgeting methods to help aid in the decision to pursue...
-
The original quarterly repayment amount using the formula for a fixed installment loan: Original loan amount (P) = N$1,500,000 Interest rate per year (r) = 8% = 0.08 Interest rate per quarter (i) =...
-
When was a control used in the investigation of the amphipods and sea butterflies? Why was a control necessary?
-
Which of the following is a core attribute that the Wall Street analyst left out of his analysis of AMC? A. Corporate governance systems rely on checks and balances among managers, directors, and...
-
What is the terminal year after-tax nonoperating cash flow at the end of year five? A. \($108\),000. B. \($132\),000. C. \($180\),000. McConachie Company is considering the purchase of a new 400-ton...
-
On the basis of the Wall Street analyst comments about AMCs corporate governance system, which of the following would be most effective for AMC to attract investors interest? A. Implement a corporate...
-
Which of the following best describes the corporate governance responsibilities of members of the board of directors? A. Establish long-term strategic objectives for the company. B. Ensure that at...
-
I'd like to know how a database Index would be implemented in a real world application, how does the backend code need to support the idea of having an index structure?
-
What are multinational corporations (MNCs) and what economic roles do they play?
-
1. What is IBMs Smarter Planet business strategy? How does this strategy relate to IBMs mission and values? 2. Conduct a SWOT analysis for IBMs Smarter Planet initiative. What are the relevant trends...
-
1. How does Toyotas approach to social responsibility relate to the three concepts of social responsibility described in the text (profit responsibility, stakeholder responsibility, and societal...
-
Todays successful women often march to their own unique drums, are highly motivated, and are very concerned about the greater good for society, says Jennifer Katz, president of AOI Marketing, Inc., a...
-
Who was Jean-Baptiste Lamarck, and how did his ideas contrast with those of Darwin?
-
How did the earliest biblical scholars estimate Earths age?
-
What is the difference between archaeology and biological anthropology? Why is biological anthropology a subfield of anthropology?
Study smarter with the SolutionInn App