Rundle Bike Company makes the frames used to build its bicycles. During year 2, Rundle made 23,000 frames; thecosts incurred follow.Unit-level materials costs (23,000units x $50)Unit-level labor costs (23,000 units× $52)Unit-level overhead costs (23,000 ×$9)Depreciation on manufacturingequipmentBike frame production supervisor'ssalaryInventory holding costsAllocated portion of facility-levelcostsTotal costsRundle has an opportunity to purchase frames for $116 each.Additional Information1. The manufacturing equipment, which originally cost $560,000, has a book value of $430,000, a remaining useful lifeof 8 years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for$67,000 per year.2. Rundle has the opportunity to purchase for $990,000 new manufacturing equipment that will have an expecteduseful life of 4 years and a salvage value of $68,800. This equipment will increase productivity substantially, reducingunit-level labor costs by 70 percent. Assume that Rundle will continue to produce and sell 23,000 frames per year inthe future.3. If Rundle outsources the frames, the company can eliminate 70 percent of the inventory holding costs.Requireda. Determine the avoidable cost per unit of making the bike frames, assuming that Rundle is considering thealternatives of making the product using the existing equipment or outsourcing the product to the independentcontractor. Based on the quantitative data, should Rundle outsource the bike frames?b. Assuming that Rundle is considering whether to replace the old equipment with the new equipment, determine theavoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit toproduce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if thecompany uses new equipment.c. Assuming that Rundle is considering whether to either purchase or outsource, calculate the impact on profitabilitybetween the two alternatives.Complete this question by entering your answers in the tabs below.Required Required RequiredABC$1,150,0001,196,000207,00098,00076,900330,000460,000$3,517,900Assuming that Rundle is considering whether to replace the old equipment with the newequipment, determine the avoidable cost per unit to produce the bike frames using thenew equipment and the avoidable cost per unit to produce the bike frames using the oldequipment. Calculate the increase or decrease in the company's profit if the company usesnew equipment. (Round "Avoidable cost per unit" to 2 decimal places.)Avoidable cost perunitProfit mustOldNewEquipment EquipmentbyShow less

Avoidable and unavoidable are the two types of cost. Avoidable cost is the one which can avoidable…

new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment. (Round "Avoidable cost per unit" to 2 decimal places.) Avoidable cost per unit Drefit mun Old New Equipment Equipment hi Show less

new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment. (Round "Avoidable cost per unit" to 2 decimal places.) Avoidable cost per unit Drefit mun Old New Equipment Equipment hi Show less

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 3PA: Pant Risers manufactures bands for self-dressing assistive devices for mobility-impaired...

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Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following standard cost sheet: Algers computes its overhead rates using practical volume, which is 54,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 274,000 pounds at 2.50 per pound c. Direct materials used: 270,300 pounds d. Direct labor: 40,100 hours at 17.95 per hour e. Fixed overhead: 161,700 f. Variable overhead: 122,000 Required: 1. Compute price and usage variances for direct materials. 2. Compute the direct labor rate and labor efficiency variances. 3. Compute the fixed overhead spending and volume variances. Interpret the volume variance. 4. Compute the variable overhead spending and efficiency variances. 5. Prepare journal entries for the following: a. The purchase of direct materials b. The issuance of direct materials to production (Work in Process) c. The addition of direct labor to Work in Process d. The addition of overhead to Work in Process e. The incurrence of actual overhead costs f. Closing out of variances to Cost of Goods Sold
A production department within a company received materials of $7,000 and conversion costs of $5,000 from the prior department. It added material of $78400 and conversion costs of $47000. The equivalent units are 5,000 for material and 4,000 for conversion. What is the unit cost for materials and conversion?
Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and water are mixed together and then bottled in 10-gallon drums. Brody provided the following information for last year: Last year, Brody completed 100,000 units. Sales revenue equaled 1,200,000, and Brody paid a sales commission of 5 percent of sales. Required: 1. Calculate the direct materials used in production for last year. 2. Calculate total prime cost. 3. Calculate total conversion cost. 4. Prepare a cost of goods manufactured statement for last year. Calculate the unit product cost. 5. Prepare a cost of goods sold statement for last year. 6. Prepare an income statement for last year. Show the percentage of sales that each line item represents.
York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of direct labor. The cost to make job 0325 is $70 in aluminum and two hours of labor at $20 per hour. During the month. York incurs $50 in indirect material cost. $150 in administrative labor, $300 in utilities, and $250 in depreciation expense. What is the predetermined overhead rate if direct labor hours are considered the cost driver? What is the cost of Job 0325? What is the overhead incurred during the month?
Vexar manufactures nails. Manufacturing is a one-step process where the nails are forged. This is the information related to this years production: Â Ending inventory was 100% complete as to materials and 70% complete as to conversion, and the total materials cost is $115,080 and the total conversion cost is $72,072. Using the weighted-average method, what are the unit costs if the company transferred out 34,000 units? Using the weighted-average method, prepare the companys process cost summary for the month.
Sturdy Bike Company makes the frames used to build its bicycles. During year 2, Sturdy made 20,000 frames; the costs incurred follow. Unit-level materials costs (20,000 units x $35.00) Unit-level labor costs (20,000 units × $42.50) Unit-level overhead costs (20,000 × $10.00) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs $ 700,000 850,000 200,000 120,000 70,000 290,000 500,000 Total costs $2,730,000 Sturdy has an opportunity to purchase frames for $92.50 each. Additional Information 1. The manufacturing equipment, which originally cost $550,000, has a book value of $450,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $70,000 per year. 2. Sturdy has the opportunity to purchase for $910,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value…
Munoz Bike Company makes the frames used to build its bicycles. During year 2, Munoz made 26,000 frames; the costs incurred follow. Unit-level materials costs (26,000 units × $50) Unit-level labor costs (26,000 units × $53) Unit-level overhead costs (26,000 × $9) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs $1,300,000 1,378,000 234,000 93,000 55,800 380,000 490,000 Total costs $3,930,800 Munoz has an opportunity purchase frames for $114 each. Additional Information 1. The manufacturing equipment, which originally cost $580,000, has a book value of $490,000, a remaining useful life of 4 years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $76,000 per year. 2. Munoz has the opportunity to purchase for $1,020,000 new manufacturing equipment that will have an expected useful life of 4 years and a salvage value of $40,000. This…
Adams Bike Company makes the frames used to build its bicycles. During Year 2, Adams made 22,000 frames; the costs incurred follow. Unit-level materials costs (22,000 units x $45) Unit-level labor costs (22,000 units x $50) Unit-level overhead costs (22,000 x $10) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs. Allocated portion of facility-level costs Total costs Adams has an opportunity to purchase frames for $112 each. Additional Information 1. The manufacturing equipment, which originally cost $560,000, has a book value of $490,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $73,000 per year. 2. Adams has the opportunity to purchase for $990,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of $20,000. This equipment will increase productivity substantially, reducing…
Solomon Bike Company makes the frames used to build its bicycles. During Year 2, Solomon made 20,000 frames; the costs incurred follow. Unit-level materials costs (20,000 units x $55) Unit-level labor costs (20,000 units x $56) Unit-level overhead costs (20,000 x $9) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs Total costs Solomon has an opportunity to purchase frames for $112 each. Additional Information $ 1,100,000 1,120,000 180,000 96,000 79,000 240,000 520,000 $ 3,335,000 1. The manufacturing equipment, which originally cost $520,000, has a book value of $470,000, a remaining useful life of four and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $71,000 per year. years, 2. Solomon has the opportunity to purchase for $910,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of…
Vernon Bike Company makes the frames used to build its bicycles. During Year 2, Vernon made 22,000 frames; the costs incurred follow. Unit - level materials costs (22,000 units \times $48) $ 1,056, 000 Unit - level labor costs (22,000 units \times $53) 1, 166,000 Unit - level overhead costs (22,000 \times $ 12) 264,000 Depreciation on manufacturing equipment 99,000 Bike frame production supervisor's salary 75, 800 Inventory holding costs 289,000 Allocated portion of facility - level costs 580,000 Total costs $ 3,529,800 Vernon has an opportunity to purchase frames for $110 each. Additional Information The manufacturing equipment, which originally cost $500,000, has a book value of $450,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $78, 000 per year. Vernon has the opportunity to purchase for $960,000 new manufacturing equipment that will have an expected useful life of four years and a…
esc Chain Reaction, Inc. allocates overhead using machine hours as the allocation activity. The following information was estimated at the beginning of the year: $300,000 of Estimated Manufacturing Overhead 10,000 Estimated Machine Hours 20,000 Estimated Direct Labor Hours During the year, it took 2,000 machine hours and 6,000 direct labor hours to produce the mountain bikes. How much manufacturing overhead was allocated to the mountain bikes during the year? Click Save and Submit to save and submit. Click Save All Answers to save all answers. 1 Q A 2 W S #3 E D $ 4 R % dlo L 5 F MacBook Pro T < 6 G & Y 7 H * 00 8 U J g
Part U16 is used by Mcvean Corporation to make one of its products. A total of 19,500 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $ 4.20 $ 8.80 $ 9.30 $ 4.70 $ 3.10 $ 8.30 An outside supplier has offered to make the part and sell it to the company for $29.90 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part U16 could be…