Atlas Engineering Ltd. Accepts a variety of jobs which require both and machineoperations. The budgeted Profit & Loss Account for the period 2018-19 is as follows:(in lakhs of dollars)Sales75Cost:Direct Material10Direct Labour5Prime Cost15Production Overheads30Production Cost45Administration, Selling and Distribution Overheads 1560Profit15Other budgeted data :Labour hours for the period25,000Machine hours for the period15,000No. Of jobs for the period300An enquiry has been received recently from a customer and the production department has preparedthe following estimate of the prime cost required for the job :Direct Material$ 2,500Direct Labour$ 2,000Prime Cost$ 4,500Labour hours required= 80Machine hours required= 50You are required to:(a) Calculate by the different methods, six absorption rates for absorption of productionoverhead and comment on the suitable of each.(b) Calculate the production overhead cost of the order based on each of the above rates.(c) Give your recommendation to the company.

Answered: (a) Calculate by the different methods,…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct materials per unitproduced. Assume that it is currently at the end of the first quarter of the year, and there are 50,000pounds of material on hand. The company’s policy is to maintain an end-of-quarter inventoryof materials equal to 25 percent of the following quarter’s material requirements for production.How many units of product were produced in the first quarter of the year? Under the assumptionthat production will increase by 10 percent in the second quarter, what are the direct materialsrequirements (in pounds) for planned production in the second quarter?
A manufacturer procures a subassembly from a supplier. The annual demand is 145,000 units, the cost per unit is $4, the inventory-carrying charge is 12 percent, and the order cost is $225. For orders between 10,000 but less than 30,000, a five percent discount is applied, and for orders exceeding 30,000, a eight percent discount is applied. What is the optimal order quantity? Use the Quantity Discount Excel template to find your answer.
A. By examining a supplier's capacity, technological resources, delivery strategies, and general business practices, you can ensure that they share your priorities, and can adjust their operations to your business' benefit. B. Efficient stock control ensures that capital is not tied up unnecessarily, and protects production if problems arises with the supply chain. A First statement is false, second is true. B First statement is true, second is false. Both True D Both False
Salary paid to purchase manager will be considered as O a. Setup cost O b. Storage cost O c. Holding cost O d. Carrying cost
As with other products, Fisher-Price faces the decision of how many Weather Teddy units to order for the comingholiday season. Members of the management team suggested order quantities of 15,000, 18,000, 24,000, or28,000 units. The wide range of order quantities suggested indicates considerable disagreement concerning themarket potential. The product management team asks you for an analysis of the stock-out probabilities forvarious order quantities, an estimate of the profit potential, and to help make an order quantity recommendation.Fisher-Price expects to sell Weather Teddy for $24 based on a cost of $16 per unit. If inventory remains afterthe holiday season, Fisher-Price will sell all surplus inventory for $5 per unit. After reviewing the sales historyof similar products, Fisher-Price’s senior sales forecaster predicted an expected demand of 20,000 units with a.95 probability that demand would be between 10,000 units and 30,000 units. Question: One of Fisher-Price’s managers felt…
Question 1 For supply item ABC, Andrews Company has been ordering 400 units per week. A new purchasing agent has been hired by the company who wants to start using the economic-order- quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units Lead time, in days Ordering costs Insurance and handling costs Purchase price per unit Return on cash investment 20,800 5 $22 $7 $15 15% Required
The demand for product is 600 units per week, and the items are withdrawn uniformly. The items are ordered, and the setup cost is $25. The unit cost of each item is $3, and the inventory holding cost is $0.05 per item per week. Assuming shortages are not allowed, determine how often to order and what size should it be. If shortages cost is $2.00 per item per week, determine how often to order and what size it should be.
If annual demand = 2500, order cost = $50, annual holding cost rate = 15%, and the purchase price = $120 for orders of less than 10,000 units, or $105 for orders of 10,000 units or more, should you take the discount? Also, what is the minimum total cost? ? a. No--$116,280 b. Yes--$208.477 c. No--$341,263 d. Yes--$302,120
A company that operates 300 days a year requires 928 units of product B annually. The supplier has a lead time of 4 days to deliver the goods. What is the re-order point?
Use a mixed strategy - level of procuction (Jan-June) and chase demand (July- September with a support of overtime and sub-contracting not more than two workers and no limid for back orders. Jan 1000 Feb 2750 March 1250 April 1500 May 2250 June 1750 July 2750 August 2250 Sept 2500 Current work force 10 workers Production per worker Inventory holding cost Regular wage rate Overtime wage rate Sub-contracting wage rate Back-ordering wage rate Hiring cost Firing cost Beginning inventory 250 units per month S0.50 per unit per month $50.00 per unit S60.00 per unit $70.00 per unit $90.00 per unit $500 per worker S800 worker per 250 units Mth Regular Production Ending Back Order Demand OT S/k Workers Inventory J F M A. M J J Total Kos (Cost:
5. What are the characteristics of a company that would be more likely to use process costing than job order costing?
Items purchased from a vendor cost $250 each, and the forecast for next year’s demand is 2,000 units. The optimal order size is 100. The firm operates 52 weeks next year and lead time is 3 weeks. It costs $5 every time an order is placed for more units, and the storage cost is $2 per unit per year. What is the number of orders per year? a.35 b.20 c.22 d.25 e.5

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(a) Calculate by the different methods, six absorption rates for absorption of production overhead and comment on the suitable of each. (b) Calculate the production overhead cost of the order based on each of the above rates. (c) Give your recommendation to the company.