Adams Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, whichoperates outside Adams's normal sales territory, asks Adams to pour 48 slabs for Lancing's new development of homes.Adams has the capacity to build 360 slabs and is presently working on 180 of them. Lancing is willing to pay only $2,500per slab. Adams estimates the cost of a typical job to include unit-level materials, $940; unit-level labor, $570; and anallocated portion of facility-level overhea

Answered: Adams Concrete Company pours concrete…

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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Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business intern spent the summer at ACH. The intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The intern, who had studied activity-based costing, identified the following activities and the data related to them: Activity Picking order Delivering order Handling complaints Total delivery cost Cost Driver Number of items Number of orders Number of complaints Annual Cost $ 308,125 720,000 40,000 Annual Driver Volume 362,500 items 30,000 orders 160 complaints $ 1,068,125 The intern selected two customers, who were frequent customers, to use as an…
Marvel Parts, Incorporated, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,055 hours each month to produce 2,110 sets of covers. The standard costs associated with this level of production are: Direct materials Total $ 51,273 Per Set of Covers $ 24.30 Direct labor $ 10,550 5.00 Variable manufacturing overhead (based on direct labor-hours) $ 4,853 2.30 $ 31.60 During August, the factory worked only 1,000 direct labor-hours and produced 2,100 sets of covers. The following actual costs were recorded during the month: Per Set of Direct materials (6,800 yards) Direct labor Total $ 49,980. Covers $ 23.80 $ 10,920 5.20 Variable manufacturing overhead $ 5,460 2.60 $ 31.60 At standard, each set of covers should require 3.0 yards of material. All of the…
Ring Company makes telephones. Currently, Ring makes all components of the telephones in-house. An outside company has offered to supply one component, part number X76, for $12 each. Ring uses 22,000 of these components per year. Costs of X76 are as follows: Direct materials $3.00 Direct labor $1.50 Variable overhead $2.75 Fixed overhead $5.00 Refer to Figure 13-7. Assume that all of the fixed overhead is allocated and cannot be avoided. Should Ring purchase the part from the outside supplier? Yes, income will increase by $104,500. No, income will decrease by $104,500. Yes, income will increase by $78,500. Yes, income will increase by $95,500. Yes, income will increase by $137,500.
Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. A. Lumber used to construct decks ($12.00 per square foot) B. Carpenter labor used to construct decks ($10 per hour) C. Construction supervisor salary ($45,000 per year) D. Depreciation on tools and equipment ($6,000 per year) E. Selling and administrative expenses ($35,000 per year) F. Rent on corporate office space ($34,000 per year) G. Nails, glue, and other materials required to construct deck (varies per job)
Old Camp Company manufactures awnings for its own line of tents. The company currently is operating at capacity and received an offer from one of its suppliers to make the 11,000 awnings it needs for $20 each. Old Camp’s costs for making the awning are $7 in direct materials and $6 in direct labor. Variable manufacturing overhead is 75 percent of direct labor. If Old Camp accepts the offer, $37,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines. Required: Complete the incremental analysis for the decision to make or buy the awnings in the table provided below. Should Old Camp continue to manufacture the awnings, or should it purchase the awnings from the supplier? Assuming the capacity released by purchasing the awnings allowed Old Camp to record a profit of $35,000, should Old Camp continue to manufacture or purchase the awnings?
Old Camp Company manufactures awnings for its own line of tents. The company is currently operating at capacity and has received an offer from one of its suppliers to make the 10,000 awnings it needs for $18 each. Old Camp’s costs to make the awning are $7 in direct materials and $5 in direct labor. Variable manufacturing overhead is 80 percent of direct labor. If Old Camp accepts the offer, $32,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines.Required:1. Complete the incremental analysis for the decision to make or buy the awnings in the table provided below. Make Buy Net Income Increase (Decrease) Direct Materials Direct Labor Variable OH Fixed OH Purchase Price Total 2. Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier?3. Assuming that the capacity released by purchasing the awnings…
Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business intern spent the summer at ACH. The intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The intern, who had studied activity-based costing, identified the following activities and the data related to them: Activity Picking order Delivering order Handling complaints Total delivery cost Cost Driver Number of items Number of orders Number of complaints Annual Cost $ 286,000 522,500 32,400 $ 840,900 Total order value (before delivery charge) Number of orders The intern selected two customers, who were frequent customers, to use as an illustration of…
Fyodor Corporation has a Parts Division that does work for other Divisions in the company as well as for outside customers. The company's Machine Division has asked the Parts Division to provide it with 6,000 special parts each year. The special parts would require $21 per unit in variable production costs. The Machine Division has a bid from an outside supplier for the special parts at $31.20 per unit. In order to have time and space to produce the special part, the Parts Division would have to cut back production of another part-the QR4 that it presently is producing. The QR4 sells for $40 per unit and requires $20 per unit in variable production costs. Packaging and shipping costs of the QR4 are $2 per unit. Packaging and shipping costs for the new special part would be only $0.50 per unit. The Parts Division is now producing and selling 30,000 units of the QR4 each year. Production and sales of the QR4 would drop by 5% if the new special part is produced for the Machine Division.…
Haver Company currently pays an outside supplier $15 per unit for a part for one of its products. Haver is considering two alternative methods of making the part. Method 1 for making the part would require direct materials of $5 per unit, direct labor of $8 per unit, and ncremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $5 per unit, direct labor of $2 per unit, and incremental overhead of $7 per unit. Required: 1. Compute the cost per unit for each alternative method of making the part. 2. Should Haver make or buy the part? If Haver makes the part, which production method should it use? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the cost per unit for each alternative method of making the part. Make with Method Make with 1 Method 2 Cost per unit Cost per unit Required t Buy Required 2 >
Isaacson's Fine Furnishings manufactures upscale custom furniture. Isaacson's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,170,000 of manufacturing overhead to individual jobs. However, Delores Johnson, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $735,000 of manufacturing overhead while the Finishing Department incurs $435,000 of manufacturing overhead. Johnson has identified machine hours (MH) as the primary manufacturing overhead cost driver in the Machining Department and direct labor (DL) hours as the primary cost driver in the Finishing Department The Isaacson's plant completed Jobs 450 and 455 on May 15. Both jobs incurred a total of 7 DL hours throughout the entire production process. Job 450 incurred 1 MH in the Machining Department and 6 DL hours in the Finishing Department (the other DL hour occurred in the Machining…
Zachary Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Zachary's normal sales territory, asks Zachary to pour 53 slabs for Lancing's new development of homes. Zachary has the capacity to build 370 slabs and is presently working on 230 of them. Lancing is willing to pay only $2,630 per slab. Zachary estimates the cost of a typical job to include unit-level materials, $820; unit-level labor, $400; and an allocated portion of facility-level overhead, $1,490. Required Calculate the contribution to profit from the special order. Should Zachary accept or reject the special order to pour 53 slabs for $2,630 each? Contribution to profit Should Zachary accept or reject the special order?
Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business intern spent the summer at ACH. The intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The intern, who had studied activity-based costing, identified the following activities and the data related to them: Activity Cost Driver Annual Cost Annual Driver Volume Picking order Number of items $ 330,750 367,500 items Delivering order Number of orders 942,500 32,500 orders Handling complaints Number of complaints 32,500 125 complaints Total delivery cost $ 1,305,750 The intern selected two customers, who were frequent customers,…

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