is presently operating at 80% of capacity and manufacturing 126,000 units of a patented electronic component. The cost structure of the component is as follows: Rav materials Direct labor Variable overhead Fixed overhead $6.60 per unit 6.60 per unit 8.60 per unit $ 441,000 per year An Italian firm has offered to purchase 20,600 of the components at a price of $27.00 per unit, FOB CMI's plant. The normal selling price is $33.80 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $25.30, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit? b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? Complete this question by entering your answers in the tabs below. Req A Req B and C Calculate the fixed overhead per unit? Note: Round your answer to 2 decimal places. Fixed overhead per unit

is presently operating at 80% of capacity and manufacturing 126,000 units of a patented electronic component. The cost structure of the component is as follows: Rav materials Direct labor Variable overhead Fixed overhead $6.60 per unit 6.60 per unit 8.60 per unit $ 441,000 per year An Italian firm has offered to purchase 20,600 of the components at a price of $27.00 per unit, FOB CMI's plant. The normal selling price is $33.80 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $25.30, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit? b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? Complete this question by entering your answers in the tabs below. Req A Req B and C Calculate the fixed overhead per unit? Note: Round your answer to 2 decimal places. Fixed overhead per unit

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter13: The Balanced Scorecard: Strategic-based Control

Section: Chapter Questions

Problem 8E: Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its...

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Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.
Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 110,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead 7. 20 per unit 7.20 per unit 9.20 per unit $451,000 per year $ Fixed overhead An Italian firm has offered to purchase 21,200 of the components at a price of $30.0 per unit, FOB IMI's plant. The normal selling price is $35.6 per component. This special order will not affect any of IMI's "normal" business. Management calculated that the cost per component is $27.7, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit? b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted?
Circult Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 130,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead $ 7.00 per unit 7.00 per unit 9.00 per unit $ 507,000 per year An Italian firm has offered to purchase 21,000 of the components at a price of $29.00 per unit, FOB CMI's plant. The normal selling price is $35.00 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $26.90, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit. b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? Complete this question by entering your answers in the tabs below. Req A Req B and C Calculate the fixed overhead per unit? Note: Round your answer to 2 decimal places. Fixed overhead per unit…
Integrated Masters Inc. (IMI) is presently operating at 50% of capacity and manufacturing 50,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials $ 1.50 per unit Direct labor 1.50 per unit Variable overhead 2.00 per unit Fixed overhead $ 100,000 per year An Italian firm has offered to purchase 30,000 of the components at a price of $6 per unit, FOB IMI’s plant. The normal selling price is $8 per component. This special order will not affect any of IMI’s “normal” business. Management calculated that the cost per component is $7, so it is reluctant to accept this special order.Required: Calculate the fixed overhead per unit? Is the cost calculation appropriate? Should the offer from the Italian firm be accepted?
S Circuit Masters Incorporated (CMI) is presently operating at 80% of capacity and manufacturing 110,000 units of a patented electronic component. The cost structure of the component is as follows: Raw materials Direct labor Variable overhead Fixed overhead An Italian firm has offered to purchase 21,200 of the components at a price of $30.00 per unit, FOB CMI's plant. The normal selling price is $35.60 per component. This special order will not affect any of CMI's "normal" business. Management calculated that the cost per component is $27.70, so it is reluctant to accept this special order. Required: a. Calculate the fixed overhead per unit. b. Is the cost calculation appropriate? c. Should the offer from the Italian firm be accepted? $ 7.20 per unit 7.20 per unit 9.20 per unit $ 451,000 per year Complete this question by entering your answers in the tabs below. Req A Req B and C Calculate the fixed overhead per unit? Note: Round your answer to 2 decimal places. Fixed overhead per unit
Specter Company makes 20,000 units per year of a part it uses in the products it manufactures.The unit product cost of this part is computed as follows:Direct materials $25.10Direct labour 18.20Variable manufacturing overhead 2.40Fixed manufacturing overhead 13.40Unit product cost $56.70An outside supplier has offered to sell the company all these parts it needs for $56.00 a unit. Ifthe company accepts this offer, the facilities now being used to make the part could be used tomake more units of a product that is in high demand. The additional contribution margin on thisother product would be $50,000 per year.If the part were purchased from the outside supplier, all the direct labour cost of the part wouldbe avoided. However, $5.10 of the fixed manufacturing overhead cost being applied to the partwould continue even if the part were purchased from the outside supplier. This fixedmanufacturing overhead cost would be applied to the company's remaining products.Required:Part a:Calculate…
Beat Company manufactures 8,000 units of a certain component per year. This component is used in the production of the main product. The following are the costs to make the component per unit: Direct materials $4 Direct labor $4 Variable overhead $3 Fixed overhead $5 If Beat Company buys the component from an outside supplier, the company can rent out the released facilities for P12,360 a year. The cost of the component per unit as quoted by the supplier is P15. 25% of fixed overhead applied in the manufacture of the component will continue regardless of what decision is made. For all purchase made by the company, freight and handling costs are applied at 2% of the purchase price. The direct materials cost presented above is exclusive of such freight and handling cost. What is the advantage or disadvantage of buying the component?A. P12,240 advantage B. 24,600 advantage C. 5,400 disadvantage D. 8,600 advantage
Harcourt Manufacturing (HM) has the capacity to produce 11,800 fax machines per year. HM currently produces and sells 8,800 units per year. The fax machines normally sell for $280 each. Modem Products has offered to buy 3,800 fax machines from HM for $150 each. Unit-level costs associated with manufacturing the fax machines are $51 each for direct labor and $76 each for direct materials. Product-level and facility-level costs are $68,000 and $83,000, respectively. How much would profit increase (decrease) if HM accepted this special order?
AlphaBrona Industries manufactures 50,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials $ 80,000 Direct labor 100,000 Variable overhead 30,000 Fixed overhead 60,000 Total $270,000 An outside supplier has offered to sell the component to AlphaBrona for $10 per unit. Fixed costs will remain the same if the component is purchased from an outside supplier. What will be the effect on income if AlphaBrona Industries purchases the component from the outside supplier? a. $290,000 decrease b. $290,000 increase c. $45,000 decrease d. $45,000 increase
Han Products manufactures 50,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is asfollows:Direct materials $ 5.50Direct labour 11.50Variable overhead 4.50Fixed overhead 10.20Total cost per part $31.70An outside supplier has offered to sell 43,500 units of part S-6 each year to Han Products for $28.00 per part. If Han Products accepts this offer, thefacilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $100,000. However, Han Products hasdetermined that 30% of the fixed overhead being applied to part S-6 will be avoided if part S-6 is purchased from the outside supplier. Required:1. What is the net dollar advantage or disadvantage of accepting the outside supplier’s offer? (Round "Total costs" and final answer to the nearestwhole dollar amount.)
Han Products manufactures 30,000 units of part S–6 each year for use on its production line. At this level of activity, the cost per unit for part S–6 is: Direct materials $ 3.60 Direct labor 10.00 Variable manufacturing overhead 2.40 Fixed manufacturing overhead 9.00 An outside supplier has offered to sell 30,000 units of part S–6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S–6 could be rented to another company at an annual rental of $80,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S–6 would continue even if part S–6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?
S Han Products manufactures 28,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part An outside supplier has offered to sell 28,000 units of part S-6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company for $78,000 per year. However, Han Products determined two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. $ 3.60 11.00 2.40 6.00 $ 23.00 Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? Financial advantage *¨¨¨¨¨¨¨