Ivan Indigo makes small phones. The estimated demand is between 9,000 and 20,000 units per month. The following table is the estimated costs at different levels of production. Selling Price $10.00 a b C Budgeted sales Direct materials Direct labor production overheads Fixed admin costs 9,000 12,000 15,000 20,000 $27,000 $36,000 $45,000 $60,000 $9,000 $12,000 $15,000 $20,000 $54,000 $60,000 $18,000 $18,000 $48,000 $18,000 Ivan wants to know The profit made at each level of production The break even point The fixed amount of production overheads The budget for 25,000 units of d production $70,000 $18,000

Ivan Indigo makes small phones. The estimated demand is between 9,000 and 20,000 units per month. The following table is the estimated costs at different levels of production. Selling Price $10.00 a b C Budgeted sales Direct materials Direct labor production overheads Fixed admin costs 9,000 12,000 15,000 20,000 $27,000 $36,000 $45,000 $60,000 $9,000 $12,000 $15,000 $20,000 $54,000 $60,000 $18,000 $18,000 $48,000 $18,000 Ivan wants to know The profit made at each level of production The break even point The fixed amount of production overheads The budget for 25,000 units of d production $70,000 $18,000

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

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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.
Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Special Order Problem Empresas Santander produces key chains. The variable costs of making each keychain total $ 2.00. Fixed product costs total $ 500,000. The company has the capacity to produce 2,000,000 key chains. 1,800,000 key chains are currently being sold. The variable administrative costs total $ 1.50 per unit, of those $ 0.25 are commissions. The fixed costs for the period total $ 200,000. The key chains sell for $ 7.00. The company received several special orders, if the order is accepted it is understood that they do not affect the regular sales of the product: a. 100,000 key fobs at $ 2.50 per key fob and commissions cost incurred. b. 200,000 key fobs at $ 2.25 per key fob and no commission cost incurred. c. 300,000 key fobs at $ 3.00 per key fob, commission cost and $ 30,000 of additional fixed product costs incurred.
es Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. $ 7.35 2.95 0.95 11.70 $ 22.95 Mc Graw Hill ! 1 Materials Labor Variable overhead Fixed overhead ($1,755,000 per year; 150,000 units per year) Total Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $17.80 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $26.50. Alpena has the total capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive embossing step. This will result in an additional $2.85 per case labor cost. The material cost of of the Decatur case will be the same as for the current models. The Decatur order will also require a one-time rental of embossing equipment for $6,549. Q A Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's…
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Consider the following production and cost data for two products, Big and Little: Big Little Demand in units 10,000 15,000 Contribution margin per unit $24 $18 Machine-hours needed per unit 4 MH 2 MH Labor hours needed per unit 6 DLH 4 DLH The company has 40,000 machine hours available each period. What is the maximum number of Bigs that should be made each period? O 10,000 2,500 O 5,500. O000
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Fremont Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $40 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 25% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:Cost Driver Dollar Amount per UnitDirect materials $15Direct labor 20Factory overhead (25% of direct labor) 5Total cost per unit 40If Fremont Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 5% of the direct labor costs. a. Prepare a differential analysis dated September 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. b. Based on the data presented, would it be advisable to make the carrying cases or to continue buying them? Explain in your own words.
Adams Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $5,900 6,200 3,500 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Adams for $2.60 each. Required X Answer is complete but not entirely correct. $ 19,300 Yes $ 24,180 X No 11,100 26,900 a. Calculate the total relevant cost. Should Adams continue to make the containers? b. Adams could lease the space it currently uses in the manufacturing process. If leasing would produce $11,800 per month, calculate the total avoidable costs. Should Adams continue to make the containers? a. Total relevant cost a. Should Adams continue to make the containers? b. Total avoidable cost b. Should Adams continue to make the containers?
What are the fixed overhead costs of making the component?
Nakatomi Corporation produces 10,000 units of Product A at a cost of $20 per unit. A detailed breakdown of the cost is below. Per Unit Variable costs $ 12 Allocated manufacturing overhead costs 3 Allocated general administrative costs 5 $ 20 Outside supplier's offer $ 17 What are the total relevant cost of producing the units internally? multiple choice $150,000 $120,000 $200,000 $170,000
Grover Company has the following data for the production and sale of 1,900 units. Sales price per unit Fixed costs: Marketing and administrative Manufacturing overhead Variable costs: Marketing and administrative Manufacturing overhead Direct labor Direct Materials What is the prime cost per unit? Multiple Choice O $320 O $340 о $615 O $100 $600,000 per period $370,500 per period $ LA LA LA LA $ $ 750 per unit $ 50 per unit 80 per unit 100 per unit 240 per unit