Littlejohn, Inc., manufactures machined parts for the automotive industry. The activity cost associated with Part XX-10 is as follows: Activity-Base Usage 250 din Activity Fabrication Setup Production control Moving Total activity cost per un Estimated units of production Activity cost per unit Each unit requires 30 minutes of fabrication direct labor. Moreover, Part XX-10 is manufactured in production run sizes of 50 units. Each production run is set up, scheduled (production control), and moved as Management is considering improvements in the setup, production control, and moving activities in order to cut the production run sizes by half. As a result, the number of setups, production runs, and moves w to 20. Such improvements are expected to speed the company's ability to respond to customer orders. 10 setups 10 pred runs 10 moves x Activity Rate $80 per di $50 per setup $30 per prod. run $25 per move 40 X Activity Cost $20,000 800 300 250 $21,350 +500 $42.70 Setup is reengineered so that it takes 60% of the original cost per setup. Production control software wis allow production control effort and cost per production run to decline by 60% Moving distance was reduced by 40%, thus reducing the cost per move by the same amount. a. Determine the revised activity cost per unit under the proposed changes. Activity cost per unit 21,180 X b. Did these improvements reduce the activity cost per unit? Yes - X e. What cost per unit for setup would be required for the solution in (a) to equal the base solution? Round your answer to the nearest cent. Cost per unit s
Littlejohn, Inc., manufactures machined parts for the automotive industry. The activity cost associated with Part XX-10 is as follows: Activity-Base Usage 250 din Activity Fabrication Setup Production control Moving Total activity cost per un Estimated units of production Activity cost per unit Each unit requires 30 minutes of fabrication direct labor. Moreover, Part XX-10 is manufactured in production run sizes of 50 units. Each production run is set up, scheduled (production control), and moved as Management is considering improvements in the setup, production control, and moving activities in order to cut the production run sizes by half. As a result, the number of setups, production runs, and moves w to 20. Such improvements are expected to speed the company's ability to respond to customer orders. 10 setups 10 pred runs 10 moves x Activity Rate $80 per di $50 per setup $30 per prod. run $25 per move 40 X Activity Cost $20,000 800 300 250 $21,350 +500 $42.70 Setup is reengineered so that it takes 60% of the original cost per setup. Production control software wis allow production control effort and cost per production run to decline by 60% Moving distance was reduced by 40%, thus reducing the cost per move by the same amount. a. Determine the revised activity cost per unit under the proposed changes. Activity cost per unit 21,180 X b. Did these improvements reduce the activity cost per unit? Yes - X e. What cost per unit for setup would be required for the solution in (a) to equal the base solution? Round your answer to the nearest cent. Cost per unit s
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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D1.
Transcribed Image Text:Analyze Littlejohn, Inc.
Littlejohn, Inc., manufactures machined parts for the automotive industry. The activity cost associated with Part XX-10 is as follows:
Activity-Base
Usage
250 din
Activity
Fabrication
Setup
Production control
Moving
Total activity cost per unit
Estimated units of production
10 setups
10 prod.runs
10 moves
Activity Rate
$50 per dih
$50 per setup
$30 per prod. run
$25 per move
Activity Cost
$20,000
800
300
250
$21,350
+500
Activity cost per unit
$:42.70
Each unit requires 30 minutes of fabrication direct labor. Moreover, Part XX-10 is manufactured in production run sizes of 50 units. Each production run is set up, scheduled (production control), and moved as a batch
Management is considering improvements in the setup, production control, and moving activities in order to cut the production run sizes by half. As a result, the number of setups, production runs, and moves will dou
to 20, Such improvements are expected to speed the company's ability to respond to customer orders.
40 X
. Setup is reengineered so that it takes 60% of the original cost per setup.
• Production control software will allow production control effort and cost per production run to decline by 60%
Moving distance was reduced by 40%, thus reducing the cost per move by the same amount.
a. Determine the revised activity cost per unit under the proposed changes.
Activity cost per units
21,180 X
b. Did these improvements reduce the activity cost per unit?
Yes X
e. What cost per unit for setup would be required for the solution in (a) to equal the base solution? Round your answer to the nearest cent.
Cost per unit
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