Manufacturing cycle times, relevant revenues, and relevant costs. The DJ Corporation makes custom specified wire harnesses for the trucking industry only upon receiving firm orders from its custom- ers. DJ has recently purchased a new machine to make two types of wire harnesses, one for Peterbilt and the other for Kenworth. The annual capacity of the new machine is 5,000 hours. The following information is available for next year: Selling Price per Order If Average Manufacturing Cycle Time per Order Is Less Than Inventory Carrying Annual Average Number of Variable Cost per Order per Hour Manufacturing Time Required 40 hours 50 hours More Than Cost per Order Customer 200 Hours 200 Hours Orders 100 10 $14,000 12,500 $13,400 11,960 $9,000 8,000 Peterbilt $0.50 Kenworth 0.45

Manufacturing cycle times, relevant revenues, and relevant costs. The DJ Corporation makes custom specified wire harnesses for the trucking industry only upon receiving firm orders from its custom- ers. DJ has recently purchased a new machine to make two types of wire harnesses, one for Peterbilt and the other for Kenworth. The annual capacity of the new machine is 5,000 hours. The following information is available for next year: Selling Price per Order If Average Manufacturing Cycle Time per Order Is Less Than Inventory Carrying Annual Average Number of Variable Cost per Order per Hour Manufacturing Time Required 40 hours 50 hours More Than Cost per Order Customer 200 Hours 200 Hours Orders 100 10 $14,000 12,500 $13,400 11,960 $9,000 8,000 Peterbilt $0.50 Kenworth 0.45

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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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Calculate the average manufacturing cycle times per order (a) if DJ manufactures only Peterbilt and (b) if DJ manufactures both Peterbilt and Kenworth

Manufacturing cycle times, relevant revenues, and relevant costs. The DJ Corporation makes
custom specified wire harnesses for the trucking industry only upon receiving firm orders from its custom-
ers. DJ has recently purchased a new machine to make two types of wire harnesses, one for Peterbilt and
the other for Kenworth. The annual capacity of the new machine is 5,000 hours. The following information is
available for next year:
Selling Price per Order If
Average Manufacturing
Cycle Time per Order Is
Less Than
Inventory
Carrying
Annual
Average
Number of
Variable
Cost
per Order
per Hour
Manufacturing
Time Required
40 hours
50 hours
More Than
Cost per
Order
Customer
200 Hours
200 Hours
Orders
100
10
$14,000
12,500
$13,400
11,960
$9,000
8,000
Peterbilt
$0.50
Kenworth
0.45

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