a. Materials and labor for servicing machine tools b. Rework costs $1,100,000 90,000 c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment 65,000 80,000 45,000 55,000 75,000 Classify each cost as value-added, non-value-added, or in the gray area between. For any cost classified in the gray area, assume 60% is value-added and 40% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 1. Required 2. 3. Magill is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 40% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 20% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly.

a. Materials and labor for servicing machine tools b. Rework costs $1,100,000 90,000 c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment 65,000 80,000 45,000 55,000 75,000 Classify each cost as value-added, non-value-added, or in the gray area between. For any cost classified in the gray area, assume 60% is value-added and 40% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 1. Required 2. 3. Magill is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 40% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 20% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing? Multiple Choice direct material cost property taxes on the factory building sales manager's salary sales commissions
Which of the following costs is best classified as a fixed cost with respect to volume of activity? (See your Chapter 20 notes, page 5) Direct labor Electricity used to heat, light, and cool a factory Cleaning supplies used in an automobile assembly plant Straight-line depreciation expense of a machine used in a factory Total cost of salaries paid to quality inspectors in a manufacturing plant Tires used in an automobile manufacturing plant
Below is a list of costs. Please identify each cost as either a product or period cost. Dragged and dropped options on the right-hand side will be automatically saved. For keyboard navigation... SHOW MORE ✓ Depreciation on office copier Depreciation on office building Insurance on office building Metal used in building a car Salary of CEO Salary of production manager Salary of assembly line workers Utilities of office building = = Product Period = Period = Period = Product = Product = = Period Period
2. Austin Electronics manufactures two large-screen television models: the Royale, which sells for $1,600, and a new model, the Majestic, which sells for $1,300. Few per unit cost data are given: Traditional Costing DM Royale $850 Majestic $570 DL ($20 per hour) MOH ($38 per DLH) $140 $248 $100 $190 In 2017, Austin manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,600,000 by the total direct labor hours (200,000) for the two models. Management is considering phasing out the Royale model (comparatively low profit) and increasing the production of the Majestic model Before finalizing its decision, management asks Austin's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2017. Est. Overhead Activity | Level 40,000 18,000…
Use the information to prepare a schedule of cost of goods manufactured and an income statement. Assume no indirect materials are used and all amounts are shown in millions.
Which of the following would probably properly classified as a step cost with respect to the volume of production ? Depreciation computed on an annual basis Total salaries paid to quality -control inspectors Real estate taxes President of the company's salary
Which one of the following is an example of a committed cost? O a. The salary of the marketing manager O b. None of the given answers С. The cost of employee training program O d. The salary of the chief operating officer e. The cost of annual end of year celebration
Which of the following is a direct cost with respect to producing a motor car? a. Salary of production supervisor b. Plant utilities c. Cost of car engine d. Depreciation of plant & equipment
Identify the following as elements of first cost or annual operating cost: (a) direct materials, (b) delivery charges, (c) periodic repairs, (d) rework andrebuild, (e) installation cost, (f ) equipment cost.
The 3 simple aspects of inventoriable product fee are direct materials, direct labor, and: (1.5 Points) b. manufacturing overhead. a. fee of items manufactu object object red. d. work in process. C. fee of items sold.
Identify each of the following costs as either a product cost (PROD) or a period cost (PER). Rent on factory building.
Which of the following is a period cost? a. Property taxes on the production facilities. b. The production supervisor's salary. c. Costs to ship the product to the customer. d. Depreciation of the factory equipment.