Step Costs, Relevant Range Bellati Inc. produces large industrial machinery. Bellati has a machining department and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Step Costs, Relevant Range Bellati Inc. produces large industrial machinery. Bellati has a machining department and a group of direct laborers called machinists. Each machinist can machine up to 500 units per year. Bellati also hires supervisors to develop machine specification plans and oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee, at most, three machinists. Bellati's accounting and production history shows the following relationships between number of units produced and the annual costs of supervision and materials handling (by machinists): Units Produced Direct Labor Supervision 0-500 $ 36,000 $ 49,000 501-1,000 72,000 49,000 1,001-1,500 105,000 49,000 1,501-2,000 150,000 87,000 2,001-2,500 180,000 2,501-3,000 3,001-3,500 3,501-4,000 216,000 87,000 87,000 Homework chap3 assignment take frame 120,000 288,000 120,000 Required: 1. On your own paper, prepare a graph that illustrates the relationship between direct labor cost and number of units produced in the machining department. (Let cost be the vertical axis and number of units produced be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 2. On your own paper, prepare a graph that illustrates the relationship between the cost of supervision and the number of units produced. (Let cost be the vertical axis and number of units produced be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 3. Suppose that the normal range of production is between 1,400 and 1,500 units and that the exact number of machinists are currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 500 units. What is the increase in the cost of direct labor? Cost of supervision? Cost of direct labor $ Cost of supervision Step Costs, Relevant Range Bellati Inc. produces large industrial machinery. Bellati has a machining department and a group of direct laborers called machinists. Each machinist can machine up to 500 units per year. Bellati also hires supervisors to develop machine specification plans and oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee, at most, three machinists. Bellati's accounting and production history shows the following relationships between number of units produced and the annual costs of supervision and materials handling (by machinists): Units Produced Direct Labor Supervision 0-500 $ 36,000 $ 49,000 501-1,000 72,000 49,000 1,001-1,500 105,000 49,000 1,501-2,000 150,000 87,000 2,001-2,500 180,000 2,501-3,000 3,001-3,500 3,501-4,000 216,000 87,000 87,000 Homework chap3 assignment take frame 120,000 288,000 120,000 Required: 1. On your own paper, prepare a graph that illustrates the relationship between direct labor cost and number of units produced in the machining department. (Let cost be the vertical axis and number of units produced be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 2. On your own paper, prepare a graph that illustrates the relationship between the cost of supervision and the number of units produced. (Let cost be the vertical axis and number of units produced be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 3. Suppose that the normal range of production is between 1,400 and 1,500 units and that the exact number of machinists are currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 500 units. What is the increase in the cost of direct labor? Cost of supervision? Cost of direct labor $ Cost of supervision
Expert Answer:
Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
Posted Date:
Students also viewed these accounting questions
-
Bellati Inc. produces large industrial machinery. Bellati has a machining department and a group of direct laborers called machinists. Each machinist can machine up to 500 units per year. Bellati...
-
Bellati Inc. produces large industrial machinery. Bellati has a machining department and a group of direct laborers called machinists. Each machinist is paid $50,000 and can machine up to 500 units...
-
Pick a Nigerian brand that has been very successful competing against the bigger global brands in its product category. What are the elements of its strategy that have enabled it to achieve this...
-
In which medium does a sound wave travel faster: in air at 20C and 1 atm or in air at 20C and 5 atm?
-
Refer to the basic graphs in AF to answer each of the following. Which is the graph of (x) = x ? Give the domain and range. A. D. 32 A 123 12 X X B. E. 2 ++ -2 A 111 +12 X C. F. 4 X +
-
For a Markov process define its infinitesimal operator: \[T(t) f\left(X_{s} ight)=\int f(y) p\left(t, X_{s}, y ight) d y=E\left[f\left(X_{t+s} ight) \mid X_{s} ight]\] Show that this operator is a...
-
Life insurance policies typically have clauses stipulating the insurance company will not pay claims arising from suicide for a specified termtypically two years from the date the policy was issued....
-
Upsidedown Cake Company produces dessert products for sale in grocery stores, but it also has a retail location. At the end of 2 0 2 3 , the company had $ 3 89 , 0 0 0 in accounts receivable before...
-
What is the present value of $140,000 to be received after 30 years with a 14 percent discount rate? Use Appendix B as an approximate answer, but calculate your final answer using the formula and...
-
Jones and Tsige worked at different branches of the Bank of Montreal ("BMO"). Jones maintains her primary bank account there. Jones and Tsige did not know or work with each other. However, Tsige...
-
MY OPINION ABOUT THIS Mr. Post gives a wonderful list of tips to keep in mind while performing legal research and writing. My favorite is his first tip. He describes the writing we do as a...
-
Topic: Identify key types of business-stakeholder relationships Source (chapter starts on page 67):...
-
Business Driven Information Systems. The article and questions are below. Wiki Your Way Wikis are web-based tools that make it easy for users to add, remove, and change online content. Employees at...
-
What two main policy objectives did governments have in creating labour relations law that replaced the common law regime?
-
Describe three different ways in which managers determine cost behavior, which do you think is most accurate? How can you visualize cost behavior and why is this important?
-
From the choice of simple moving average, exponential smoothing, and linear regression analysis, which forecasting technique would you consider the most accurate? Why? please write it in word...
-
Maximum work is done in compressing air when the compression is: (a) Isothermal compression (b) Adiabatic compression (c) Polytropic compression (d) None of these
-
Isothermal compression efficiency can be achieved by running the compressor: (a) At a very high speed (b) At a very slow speed (c) At an average speed (d) At zero speed
-
Derive the expression of work done by the compressor in isothermal compression, adiabatic compression, and polytropic compression.
Study smarter with the SolutionInn App