Meow Products Ltd. in the US produces and sells scratching posts for cats. In the current year, the company had expected to sell 12 000 posts but actually produced and sold 10 000 posts. The following information is available regarding the standard cost to produce a single post: Direct materials:3 feet @ $3 per foot Direct labour:15 minutes @ $0.30 per minute In the current year, 14 000 feet of material were purchased out of which 9 500 feet were used at a cost of $3.55 per foot, and 160 000 direct labour minutes were incurred at a cost of $0.32 per minute. The company's direct materials price variance for the current year was: $2 350 F $23 100 U $7 700 U $11 400 F

Meow Products Ltd. in the US produces and sells scratching posts for cats. In the current year, the company had expected to sell 12 000 posts but actually produced and sold 10 000 posts. The following information is available regarding the standard cost to produce a single post: Direct materials:3 feet @ $3 per foot Direct labour:15 minutes @ $0.30 per minute In the current year, 14 000 feet of material were purchased out of which 9 500 feet were used at a cost of $3.55 per foot, and 160 000 direct labour minutes were incurred at a cost of $0.32 per minute. The company's direct materials price variance for the current year was: $2 350 F $23 100 U $7 700 U $11 400 F

Name: Meow Products Ltd. in the US produces and sells scratching posts for
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Meow Products Ltd. in the US produces and sells scratching posts for cats. In the currentyear, the company had expected to sell 12 000 posts but actually produced and sold 10000 posts.The following information is available regarding the standard cos

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Per Unit 20,000 UnitsPer Year Direct materials $ 17 $ 340,000 Direct labor 11 220,000 Variable manufacturing overhead 3 60,000 Fixed manufacturing overhead, traceable 3 * 60,000 Fixed manufacturing overhead, allocated 6 120,000 Total cost $ 40 $ 800,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000…
Mo Furniture manufactures a frame for use in its production of sofas. When 10,000 frames are produced, the costs per unit are: Direct materials $ 12 Direct manufacturing labor 60 Variable manufacturing overhead 24 Fixed manufacturing overhead 32 Total $128 A company has offered to sell Mo Furniture 10,000 sofa frames for $120 per unit. Fixed manufacturing overhead of $20 per unit used to make the frame could be eliminated if the frames were purchased instead of made. What is the relevant cost per unit to make the frame in this make or buy decision?
Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 20,000 tons of its granular. Because of this year’s mild winter, projected demand for its product is only 15,000 tons. Based on projected production and sales of 15,000 tons, the company estimates the following income using absorption costing. Sales (15,000 tons at $80 per ton) $ 1,200,000 Cost of goods sold (15,000 tons at $60 per ton) 900,000 Gross profit 300,000 Selling and administrative expenses 300,000 Income $ 0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials $ 13 per ton Direct labor $ 4 per ton Variable overhead $ 3 per ton Fixed overhead ($600,000/15,000 tons) $ 40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative…
Seaside Company produces picture frames. During the year 190,000 picture frames were produced. Materials and labor standards for producing the picture frames are as follows: Direct materials (2 pieces of wood @ $2.25) $4.50 Direct labor (2 hours @ $10) $20.00 Seaside purchased and used 400,000 pieces of wood at $2.00 each and its actual labor hours were 360,000 hours at a wage rate of $10.50. What is Seaside's labor rate variance? a.$217,500 F b.$225,000 U c.$180,000 U d.$180,000 F
Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 20,000 tires for $116 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct material $56 Direct labor 22 Factory overhead (60% variable) 25 Selling and Admninistrative (45% variable) 26 Total $129 Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales…
Tolkien Transporthas a small facility adjacent to its Leeds depot which it uses to manufacture tarpaulins for its lorries. The facility currently produces3000 tarpaulins a year. The company’s Finance Manager has estimated the cost per tarpaulin at this level of output to be: Cost per unit Direct Materials £50 Direct Labour (cutting, trimming and sewing) £45 Variable manufacturing overhead £37 Fixed manufacturing overhead £43 An outside supplier has offered to supply all the tarpaulins required by Tolkien for £145 each. If Tolkien decided not to make the tarpaulins, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Required: Calculate how much higher or lower Tolkien’s net operating income would be if it purchased the tarpaulins from the outside supplier, showing all calculations. Would you advise Tolkien to accept the offer? Clearly explain to Tolkien’s Finance…
Seaside Company produces picture frames. During the year 190,000 picture frames were produced. Materials and labor standards for producing the picture frames are as follows: Direct materials (2 pieces of wood @ $2.25) $4.50 Direct labor (2 hours @ $10) $20.00 Seaside purchased and used 400,000 pieces of wood at $2.00 each and its actual labor hours were 360,000 hours at a wage rate of $10.50. Refer to Figure 10-5. What is Seaside's labor rate variance? $180,000 F $180,000 U $225,000 U $217,500 F
A VACUUM MANAUFACTUER HAS PREPARED THE FOLLOWING HAS THE FOLLOWING COST DATA FOR MANUFACTURING ONE OF ITS ENGINE COMPONENTS BASED ON THE ANNUAL PRODUCTION OF 50,000 UNITS DIRECT MATERIALS $75,000 DIRECT LABOR $100,000 TOTAL $175,000 IN ADDITION, VARIABLE FACTORY OVERHEAD IS APPLIED AT $7.50 PER UNIT. FIXED FACTORY OVERHEAD IS APPLIED AT 150% OF DIRECT LABOUR COST PER UNIT. THE VACUUM SELLS FOR $150 EACH. A THIRD PARTY HAS OFFERED TO MAKE THE ENGINES FOR $60 PER UNIT. 75% OF THE FIXED FACTORY OVERHEAD, WHICH REPRESENTS EXECUTIVE SALARIES, RENT, DEPRECIATION, AND TAXES, CONTINUES REGARDLESS OF DECISION. sHOULD THE COMPANY MAKE OR BUY THE ENGINES?
Han Products manufactures 28,000 units of part 5-6 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 $ 3.60 11.00 2.40 6.00 $23.00 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 at an annual rental of $78,000. 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?
Each year, Basu Company produces 14,000 units of a component used in microwave ovens. An outside supplier has offered to supply the part for $1.28. The unit cost is: Direct materials $0.83 Direct labor 0.33 Variable overhead 0.06 Fixed overhead 2.65 Total unit cost $3.87 Required: 1. What are the alternatives for Basu Company? 2. Assume that none of the fixed cost is avoidable. List the relevant cost(s) of internal production. List the relevant cost(s) of external purchase. 3. Which alternative is more cost effective and by how much? by $fill in the blank 5 4. What if $21,520 of fixed overhead is rental of equipment used only in production of the component that can be avoided if the component is purchased? Which alternative is more cost effective and by how much? by $fill in the blank 7
Caribu Company produces sanitation products after processing specialized chemical The following relates to its activities: • 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 is processed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, a gram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre. At an additional cost of $400, Caribu can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can be sold for $2 per pack. Required: 1. Allocate the joint cost to the Detergent and the Softener using the following a Sales value at split-off method ( b. NRV method 2. Should Caribu have processed each of the products further? What effect does the allocation method have on this decision?
Steering produces a hard disk drive that sells for $175 per unit. The cost of producing 25,000 drives in the prior year was: Direct material Direct labor Variable overhead Fixed overhead Total cost $ 700,000 475,000 225,000 1,500,000 $ 2.900.000 At the start of the current year, the company received an order for 2,940 drives from a computer company in China. Management of Steering has mixed feelings about the order. On one hand, they welcome the order because they currently have excess capacity. Also, this is the company's first international order. On the other hand, the company in China is willing to pay only $122 per unit. What will be the effect on profit of accepting the order? (Enter decrease in profit using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).)