B fx REQUIRED: Direct materials Direct labor Expected overhead Expected production 2024 D oil change Brain surgery rent on facilty transfusion machine indirect labor oil change Brain surgery oil changes brain surgeries $910,000 E $25 $200 Frankenstein Company has hired a new CEO and she want to impliment ABC (Activity Based Costing) she has uncovered the following overhead USING ABC DETERMINE THE COST OF A) OIL CHANGE B) BRAIN SURGERY 1 hour at $30 per hour 2 hours at $10 per hour 10000 20000 $400,000 allocated using labor hours $300,000 needed 1 hour for oil change and 1 hour for brain surgery $210,000 based on direct labor dollars

B fx REQUIRED: Direct materials Direct labor Expected overhead Expected production 2024 D oil change Brain surgery rent on facilty transfusion machine indirect labor oil change Brain surgery oil changes brain surgeries $910,000 E $25 $200 Frankenstein Company has hired a new CEO and she want to impliment ABC (Activity Based Costing) she has uncovered the following overhead USING ABC DETERMINE THE COST OF A) OIL CHANGE B) BRAIN SURGERY 1 hour at $30 per hour 2 hours at $10 per hour 10000 20000 $400,000 allocated using labor hours $300,000 needed 1 hour for oil change and 1 hour for brain surgery $210,000 based on direct labor dollars

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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Are the fixed costs as well as the 'other variable costs" included in the calculations of total overhead?
Outsourcing (Make-or-Buy) Decision Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. Direct materials $9.00 Direct labor 1.40 Factory overhead 10.00 Total $ 20.40 These cost predictions include $80,000 in fixed factory overhead averaged over 10,000 units. The completed air purifier units include a battery-operated electric motor, which Mountain Air assembles with parts purchased from an outside vendar for $2.00 per motor. Mini Motor Company has offered to supply an assembled battery operated motor at a cost of $5.50 per unit, with a minimum annual order of 5,000 units. If Mountain Air accepts this offer, it will be able to reduce the variable labor and variable overhead casts of the auto air purifier by 50 percent. (a) Determine whether Mountain Air should continue to make the…
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Outsourcing (Make-or-Buy) Decision Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. Direct materials $8.00 Direct labor 1.50 Factory overhead 7.00 Total $16.50 These cost predictions include $40,000 in facility-level fixed factory overhead averaged over 10,000 units. One of the component parts of the auto air purifier is a battery-operated electric motor. Although the company does not currently manufacture these motors, the preceding cost predictions are based on the assumption that it will assemble such a motor. Mini Motor Company has offered to supply an assembled battery-operated motor at a cost of $4.50 per unit, with a minimum annual order of 5,000 units. If Mountain Air accepts this offer, it will be able to reduce the variable labor and variable overhead costs of…