35) The managerial accountant at Sellers Manufacturing produces a product, Part Z that the companyuses to make multiple products at its facility in Virginia. The managerial accountant reported to theoperations manager that 12% of its fixed overhead costs assigned to Part Z will not continue if SellersManufacturing outsources the production of Product Z at $44 per unit to Manufacturing World. Themanagerial accountant reported that to produce 1,200 units of Product Z, Sellers Manufacturing incursthe following costs:10Should Sellers Manufacturing produce Part Z or outsource it to Manufacturing World?(hint: first find the total cost including variable and fixed cost for making part Zs and then compare this to the priceof outsourcing considering the price of buying the parts and the unavoidable costs.)

To determine whether Sellers Manufacturing should produce Part Z or outsource it to Manufacturing…

Answered: 35) The managerial accountant at…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Acklin Company has two products: A and B. The annual production and sales of Product A is 600 units and of Product B is 900 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.3 direct labor-hours per unit. The total estimated overhead for next period is $63,322. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows: Activity Cost Pool Est Ovhd Cost Expected Acty - Prod A Expected Acty -Prod B Total Activity 1 $ 18,900 700 200 900 Activity 2 $ 15,631 1,000 100 1,100 General Factory $ 28,791 300 270 570 Total $ 63,322 The overhead cost per…
Delta produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $ 90,000 Direct labor 130,000 Variable factory overhead Fixed factory overhead 140,000 Total costs $420,000 60,000 Of the fixed factory overhead costs, $60,000 is avoidable. 20) Conners has offered to sell 10,000 units of the same part to Delta for $36 per unit. Assuming there is no other use for the facilities, what is the effect on operating income if Delta buys from Conners? 21) Assuming no other use of their facilities, at what buying price per unit for Delta would Delta's operating income be the same whether they made the part or bought it from Conners?
A company makes 36,000 motors to be used in the production of its blender. The average cost per motor at this level of activity is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside supplier recently began producing a comparable motor that could be used in the blender. The price offered to the company for this motor is $23.95. There would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be: Multiple Choice O O O ($68,400) $214,200 $9.50 $ 8.50 $ 3.45 $ 4.40 90,000 $158,400
CM Manufacturing has provided the following unit costs pertaining to a component they manufacture and use in the production of one of their main products: Direct materials $315 Direct labor (variable) 96 Variable manufacturing overhead 72 Fixed manufacturing overhead 29 A supplier has offered to provide the component to CM manufacturing for 500 per unit. CM Manufacturing currently has no plans to use idle space that would be created if accepting offer from supplier. Assuming that CM Manufacturing needs 2,000 components annually and the fixed manufacturing overhead is unavoidable, what would be the impact on operating income the company outsources? **Show your work to support your answer.
Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys the Part GX from McMillan Company for $79 instead of making it, Edidas will not use the released facilities in another manufacturing activity. Twenty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost per unit data are as follows: Cost to make the part Direct Materials Direct Labor (S) 30 15 Variable Overhead 20 Fixed Overhead 20 85 Required : 1. Explain which alternative is more attractive to Edidas, make or buy Part GX. 2. Assume there is new information that Edidas is negotiating to purchase cheaper raw materials from supplier (Twenty percent lower price). Is this information relevant or irrelevant? On the basis of financial considerations alone, should Edidas make or buy Part GX? Show your calculations 3. Based on requirement 2, what are relevant qualitative factors that Edidas should consider to decide whether to make or buy Part GX?…
Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows: Direct materials: 5 kg at $10.00 per kg Direct labour: 2 hours at $15 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $50.00 30.00 10.00 $90.00 The company planned to produce and sell 32,000 units in March. However, during March the company actually produced and sold 37,600 units and incurred the following costs: a. Purchased 200,000 kg of raw materials at a cost of $9.40 per kg. All of this material was used in production. b. Direct labour: 75,000 hours at a rate of $16 per hour. c. Total variable manufacturing overhead for the month was $558,750. 1. What is the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable,…
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4.)
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Peter Ltd manufactures and sells batteries. The cost data for the product are given below. The accountant told the President that he will prepare two different sets of income statements for thePresident’s review. The data are given as follows: Variable cost: Direct materials $6Direct labor $12Variable overhead $4Variable selling and administrative $3 Fixed cost per month: Fixed manufacturing overhead $240,000Fixed selling and administrative $180,000 The batteries sell for $40 per unit. Production and sales data for January are shown below. Units produced 30,000Units sold 26,000 Required:a. Prepare the absorption costing income statement.b. Prepare the variable costing income statement.c. Explain to the President the differences between the two income statements (if any) and the net income figures he should rely on.
Dog
Namco Inc. is a large company that segments its business into cost and profit centers. The Cost center for the manufacture of Product M2T incurred the following costs in October: Direct Labor: $25/unit Direct Materials: $80/unit Variable Overhead: $15/unit Traceable Fixed Costs: $62,000 Common Fixed Costs: $100,000 Sales were 2,000 units in October. Each unit sells for $210. The M2T Department is being evaluated on overall profitability. In September, the department margin was $100,000. By how much did the department margin increase or decrease in October? Select one: a. $100,000 decrease b. $18,000 increase c. $82,000 decrease d. $118,000 increase e. $80,000 increase

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