Haver Company currently pays an outside supplier $33 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 $14 per unit, direct labor of $17 per unit, and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $14 per unit, direct labor of $11 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. Cost per unit Make with Method 1 Make with Method 2 Cost per unit $ 0 Required 1 $ 0 $ Buy Required 2 >

Haver Company currently pays an outside supplier $33 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 $14 per unit, direct labor of $17 per unit, and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $14 per unit, direct labor of $11 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. Cost per unit Make with Method 1 Make with Method 2 Cost per unit $ 0 Required 1 $ 0 $ Buy Required 2 >

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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Use the information provided to calculate standard costs: To make one switch it takes 19 feet of plastic-coated copper wire and 0.3 pounds of plastic material. The plastic material can usually be purchased for $16 per pound, and the wire costs $2.93 per foot. The labor necessary to assemble a switch consists of two types. The first type of labor is assembly, which takes 3.1 hours. These workers are paid $29 per hour. The second type of labor is fınishing, which takes 3.0 hours. These workers are paid $28 per hour. Overhead is applied using labor hours. The variable overhead rate is $14.46 per labor hour. The fixed overhead rate is $15.52 per hour, What is the total standard cost for direct labor? Round to the nearest penny, two decimal places.
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Boston Executive, Inc., produces executive limousines and currently manufactures the mini-bar inset at these costs: Cost per Unit Variable costs Direct material Direct labor Variable overhead Total variable costs Fixed costs: Variable Costs Direct material Direct labor Variable overhead Depreciation of equipment Depreciation of building Supervisors salaries Total fixed costs Total cost The company received an offer from Elite Mini-Bars to produce the insets for $2,120 per unit and supply 1,100 mini-bars for the coming year's estimated production. If the company accepts this offer and shuts down production of this part of the business, production workers and supervisors will be reassigned to other areas. Assume that for the short-term decision-making process demonstrated in this problem, the company's total labor costs (direct labor and supervisor salaries) will remain the same if the bar inserts are purchased. Fixed Costs Equipment depreciation Building depreciation The specialized…
B.) An industrial engineer has designed two alternative methods for accomplishing a production job. Both methods involve the acquisition of the same working place and other capital equipment to be used for this job only. Method A calls for a crew consisting of three men each costing P30.00 per hour. This method will result in the production of 10 units per hour of which two will be reject. Method B calls for a crew of two men each costing P35.00 per hour and should result in the production of eight units per hour of which one will be reject. The cost of the direct material lost in each reject is P20.00. If a certain total number of units is to be produced, find which method is economical?
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Tool Time manufactures carpenter-grade screwdrivers. The company is trying to decide whether to continue to make the case in which the screwdrivers are sold, or to outsource the case to another company. The direct material and direct labor cost to produce the cases total $2.40 per case. The overhead cost is $1.00 per case which consists of $0.40 in variable overhead that would be eliminated if the cases are bought from the outside supplier. The $0.60 of fixed overhead is based on expected production of 400,000 cases per year and consists of the salary of the case production manager of $80,000 per year, along with the remainder consisting of rent, insurance, and depreciation on equipment that will have no resale value. The manager will be laid off if the cases were bought externally. The outside supplier has offered to supply the cases for $3.40 each. How much will Tool Time save or lose if the cases are bought externally? Save $0.40 per case Lose $0.20 per case…
Lloyd Gettys, a client of Kevin Lomax, is considering two different processes to make his product—process 1 and process 2. Process 1 requires Lloyd to manufacture subcomponents of the product in-house. As a result, materials are less expensive, but fixed overhead is higher. Process 2 involves purchasing all subcomponents from outside suppliers. The direct materials costs are higher, but fixed factory overhead is considerably lower. Relevant data for a sales level of 30,000 units follow: Process 1 Process 2 Sales $8,010,000 $8,010,000 Variable expenses 2,700,000 4,200,000 Contribution margin $5,310,000 $3,810,000 Less total fixed expenses 3,650,625 1,428,750 Operating income $1,659,375 $2,381,250 Unit selling price $267 $267 Unit variable cost $90 $140 Unit contribution margin $177 $127 a. Compute the degree of operating leverage for each process. b. Suppose that sales are 20 percent higher than budgeted. By what percentage will operating income increase for each process? What will be…
The volume of the raw material required for a certain machine part is 2.02 cu. cm. The finished volume is 1.05 cu. cm. The time for machining each piece is 45 seconds for steel and 30 seconds for brass. The costs of steel is P32.50 per kg and the value of steel scrap is negligible. The cost the brass is P60 per kg and the value of brass scrap is P25 per kg. The wage of the operator is P40 per hr and the overhead cost of the machine is P50 per hour. The weight of steel and brass are 0.0081 and 0.0088 kg per cu. cm, respectively. How much is the total cost per piece of steel and brass. Which material will you recommend? Upload Choose a File
Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has to overhead of $132,720. Carlise has identified the following information about its overhead activity cost pools and the two product lines: Quantity/Amount Consumed by Indoor Line Quantity/Amount Consumed by Outdoor Line Activity Cost Pools Cost Driver Materials handling Number of moves Quality control Number of inspections Machine maintenance Number of machine hours Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Indoor Model Outdoor Model Total Cost Assigned to Pool $21, 120 $71,760 4,600 inspections $39,840 29,000 machine hours 19,000 machine hours 600 moves 500 moves 5,800 inspections Overhead Assigned
Cantrall Company is trying to decide which product to manufacture. Expected direct materials costs are $4.00 per unit for each product. The expected direct labor costs are $2.00 per unit for one product and $4.00 per unit for another product. In choosing between the two products, the direct materials costs are A) relevant; irrelevant B) irrelevant; relevant C) relevant; relevant D) irrelevant; irrelevant and the direct labor costs are
Waterway Engine Incorporated produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Waterway. The supplier will charge Waterway $315 per engine for the set of parts. Waterway's current costs for those part sets are direct materials, $140; direct labor, $80; and manufacturing overhead applied at 100% of direct labor. Variable manufacturing overhead is considered to be 20% of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier. Required: a. What would be the net cost advantage or disadvantage if Waterway decided to purchase the parts? b. Should Waterway Engine continue to make the part sets or accept the offer to purchase them for $315? a. b. Waterway Engine Incorporated should
Ole Company manufactures two products, Product A and Product B. Currently, machine hours are used to allocate the overhead costs to the two products. Ole Company is considering adopting an activity-based costing system. If so, overhead costs will be traced to the following activities: Activities Machining Quality Control Material Moves Activity cost pools $300,000 $200,000 $400,000 Cost Drivers Machine Hours Number of inspections Number of moves Product A 30,000 400 2,000 Product B 20,000 600 6,000 (a) Calculate the total overhead cost assigned to Product A under the current system. (b) Calculate the total overhead cost for Product A if the company implements activity-based costing system. (c) Briefly explain which costing method gives a more accurate picture of the costs. (d) Suppose you are the management accountant in a university. List any three (3)activities commonly carried out in universities and identify an appropriate cost driver for each activity.