Five-Star Manufacturing Co. rewards the company's plant manager with a year-end bonus based on the increase in the plant's operating income. For purposes of determining the manager's bonus, should operating income be calculated using variable costing or absorption costing? Support your recommendation with facts and analysis of textbook material.
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- Classify each cost as being either variable or fixed with respect to the number of units produced and sold. Also classify each cost as either a period or a product cost. Predicting Cost Preparing Behavior Statements Cost Item 1. Hamburger buns in a Wendy's restaurant. 2. Advertising by a dental office. 3. Apples processed and canned by 4. Shipping canned apples from a Del Monte plant to customers. 5. Insurance on a Bausch & Lomb factory producing contact lensesFisher Fixtures manufactures three types of lighting fixtures, with model names of Silver, Gold, and Platinum. It applies all indirect costs according to an annual predetermined rate based on direct labor-hours. The plant controller has recommended that the company switch to an activity-based costing system. The controller's staff prepared the following cost estimates for next year (year 2) for the recommended cost drivers. Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Activity Purchasing material Number of purchase orders $ 130,800 240 purchase orders Receiving material Direct materials cost 238,400 $ 2,980,000 Setting up equipment Number of production runs 231,840 120 runs Machine depreciation and maintenance Machine-hours 80,260 16,052 hours Ensuring regulatory compliance Number of inspections 459,000 54 inspections Shipping Number of units shipped 1,087,200 604,000 units Total estimated cost $ 2,227,500 In addition, management…Dinesh Bhai
- Jansen, Inc. pays bonuses to its managers based on operating income. Thecompany uses absorption costing, and overhead is applied on the basis of direct labor hours. To increase bonuses, Jansen’s managers may do all of the following except A. Produce those products requiring the most direct labor.B. Defer expenses such as maintenance to a future period.C. Increase production schedules independent of customer demands.D. Decrease production of those items requiring the most direct labor.Franklin Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Direct labor Direct materials Fringe Benefits: Home 1 2 3 Total Indirect Materials: Assume Franklin needs to allocate two major overhead costs ($67,200 of employee fringe benefits and $18,080 of Indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. Note: Round "Allocation rate" to 2 decimal places. Home 1 2 3 Total Expected Costs Direct labor Direct materials Fringe benefits Indirect materials Total cost Home 1 $ 61,000 107,000 The cost components to determine the total cost of each house: Home 1 Home 2 Allocation Rate x Weight of Base = Allocated Cost X $ 0 0 0 $ Home 2 $ 101,000 148,000 X X Allocation Rate x Weight of Base 0 X $ 0 = = = Home 3 $ 174,000 197,000 = = $ = Allocated Cost $ 0 0 $ $ 0…Muscat Pharmaceutical Manufacturing Company (Muscat Pharma) is a company devoted to manufacturing and exporting of veterinary medicine and veterinary products. Mr. Mazin is the accounts manager of the company, who spent his valuable time and effort in providing half-yearly accounting reports to the suppliers of the company. This is an example of O a. Monitoring Cost O b. Residual Cost O c Bonding Cost O d. Indirect Agency Cost
- Classify each cost as either a product cost or a period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory Indicate whether each period cost is a selling expense or an administrative expense. Costs a. Annual bonus paid to the chief financial officer of the company b. Annual fee to a celebrity to promote the aircraft c. Cost of electronic guidance system installed in the airplane cockpit d. Cost of the flight data recorder (the black box) for the airplane e. Cost of normal scrap from production of the airplane body f. Cost of small replicas of the airplane used to promote and market the airplane g. Cost of paving the headquarters employee parking lot h. Decals for cockpit door, the cost of which is immaterial to the cost of the final product 1. Depreciation on factory equipment j. Hourly wages for janitorial staff for the factory k. Hydraulic pumps used in the airplane's flight control system 1. Instrument panel installed in the…please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)Objective: Consider that you are an analyst at Regeneron Pharmaceuticals. You need to decide how to allocate administrative overhead costs to Regeneron's main commercial products (Eylea, Dupixent, Kevzara and Praluent). Determine how to appropriately allocate the costs in the table below to each of the commercial products using an allocation methodology of your choice. Department2019 Annual Operating ExpenseTime spent supporting Commercial productsCommercial$200MM100%IT$100MM25%Facilities$150MM0%Finance$25MM20%Human Resources$75MM10% Use the supporting document Net Product Sales of REGN Products to facilitate your analysis. Provide a written summary of how you allocated the overhead costs to each product in an outline of no more than one page. As a starting point, it's recommended that you revisit the material we covered in Chapter 12. Guidance on calculations:Start off with Net Product Sales of REGN Products. Your objective pertains to 2019 expenses, so you should be reviewing 2019…
- Prepare a Production Cost Report for the Manufacturing Department for the month of January 2021.An industrial engineer is tasked to determine the best production rate for a new type of casting in a foundry. After experimenting with many combinations of hourly production rate and total production cost per hour, he summarized his findings as shown in the table below (Table 1). The engineer then talked to the firm’s marketing specialist, who provided these estimates of selling price per casting as a function of production output (Table 2). What production rate would you recommend to maximize total profit? Table1 Total cost/hour $1,000 $2,600 $3,200 $3,900 $4,700 Castings produced/hr 100 200 300 400 500 Table 2 Selling price/casting $20.00 $17.00 $16.00 $15.00 $14.50 Castings produced/hr 100 200 300 400 500The Write Way manufactures double sided pens- a pen on one side, a highlighteron the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year-end. Team members are very familiar with absorbtion costing, as they have been evaluating gross margin amounts and percentages for years. They are lesss keen on how fixed-MOH impacts the income statment, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variase is written off to COGS.Theoretical level - 80,000 units Practical level - 60,000 units Normal level - 50,000 units Actual production - 65,000 units Sales Volume - 60,000 units Budgeted fixed-MOH cost - $240,000 Budgeted DM cost - $2.25 per unit Budgeted DL cost -$1.30 per unit Budgeted…