Pavan company manufactures carpets. His company is situated in a small town and is having a labour crisis. He is operating at 50% capacity level and manufactures 2,000 carpets per year and each carpet on an average sell at Rs 10,000. Direct material Direct labour Variable overhead Manufacturing overhead (fixed) Administrative overheads (fixed) *5,000 per unit 2,000 per unit 1,000 per unit €20,00,000 €15,00,000 In case management shuts down the plant, fixed manufacturing overheads will reduce to 10,00,000. Fixed administrative overheads will reduce by 10,00,000. Management has to pay 10,00,000 to the laborer in case the plant shuts down. Management is certain that the business will recover after a few months and the labours problem will be over. Required a. Advice the management whether the plant should shut down or continue to operate. State reasons b. What will be your decision in case the plant was operating at 80% instead of 50% level? Show calculations.

Pavan company manufactures carpets. His company is situated in a small town and is having a labour crisis. He is operating at 50% capacity level and manufactures 2,000 carpets per year and each carpet on an average sell at Rs 10,000. Direct material Direct labour Variable overhead Manufacturing overhead (fixed) Administrative overheads (fixed) *5,000 per unit 2,000 per unit 1,000 per unit €20,00,000 €15,00,000 In case management shuts down the plant, fixed manufacturing overheads will reduce to 10,00,000. Fixed administrative overheads will reduce by 10,00,000. Management has to pay 10,00,000 to the laborer in case the plant shuts down. Management is certain that the business will recover after a few months and the labours problem will be over. Required a. Advice the management whether the plant should shut down or continue to operate. State reasons b. What will be your decision in case the plant was operating at 80% instead of 50% level? Show calculations.

Name: Pavan company manufactures carpets. His company is situated in a smal
Uploaded: 2024-03-20T06:33:06.000Z
Channel: Bartleby
Description: Pavan company manufactures carpets. His company is situated in a small town and is havinga labour crisis. He is operating at 50% capacity level and manufactures 2,000 carpets peryear and each carpet on an average sell at Rs 10,000.Direct materialDir

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

Windsor Co.incurs $987000 of overhead costs each year in its three main departments, machining ($560000), inspections ($280000) and packing ($147000). The machining department works 4000 hours per year, there are 600 inspections per year, and the packing department packs 1000 orders per year. Information about Windsor's two products is as follows: Product Y Product X 3000 Machining hours 1000 100 500 Inspections 350 650 Orders packed Direct labor hours 1800 1700 If traditional costing based on direct labor hours is used, how much overhead is assigned to Product X this year? o $341654 $479400 e$238117 $493500
Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available.
KLP produce 3 products A, B, C. They have a bottleneck on one machine with it being operational for only 8 hours per day. Conversion costs (total factory costs) are £80,000 per day. The throughput contribution and hours in bottleneck for each product is as follows: Product Throughput contribution Hours in bottleneck process per unit A £80 per unit; 0.04 B £75 per unit; 0.05 C £180 per unit 0.10 Required: Calculate the throughput accounting ratio (TAR) for each product. Advise how the TAR can be used to optimise production when there is a bottleneck.
Jumbo Co. sells a special toy product in Hong Kong. The cost information for the current year is as follows: Direct materials at $12 per poundDirect labour at $10 per hourVariable manufacturing overheadsVariable selling and administrative overheads Fixed manufacturing overheads Fixed selling and administrative overheads 2 pounds per unit 4 hours per unit$5 per direct labour hour $18 per unit $2,000,000 per year $1,000,000 per year A supplier selling production machines has offered Jumbo Co. a new model of the machine which can improve productivity by reducing one hour of labour time per unit. The renting cost of this new machine will incur an extra cost of $45,000 per month. Currently the annual sales quantity is 60,000 units and the selling price is $300 each. Your manager is seeking your advice for the replacement of the machine. Required: (a) Calculate the change in Net Profit resulting from the replacement of the machine. Indicate whether it is an Increase or a…
3 Ryan Corporation manufactures auto steering systems. Prime cost and machine time estimates for one unit of the product for the year follow: Direct materials Direct labor ($19/hour) Machine hours This product requires 15 hours of direct labor in Department A and 10 hours in Department B. Also, it requires 5 machine hours in Department A and 15 machine hours in Department B. Using output as the activity, the factory overhead costs estimated in these two departments follow: A $ 255,000 $ 150,000 101,000 170,000 Management expects the firm to produce 1,000 units during the year. Variable cost Fixed cost $ 270 $ 475 20 Required: 1. Assume the total actual overhead base used was equal to the estimated base for the 1,000 units produced. Assume that factory overhead was applied on the basis of direct labor hours. Compute the predetermined plantwide factory overhead rate. 2. If factory overhead were applied on the basis of machine hours, what would be the plantwide overhead rate? 3. If the…
The company produces three products namely pen , pencil and paper . The production and sales volume of pen is 15000 units, pencil is 12,000 units and paper is 10,000 units. Total annual overhead spent on delivery RO 55,000 . Number of deliveries for pen 23 , pencil 48 and paper 39. What is the delivery cost driver rate for the company? a . RO 500 b . RO 37,000 C. RO 110 d. RO 5,000
Calla Company produces skateboards that sell for $50 per unit. The company currently has the capacity to produce 90,000 skateboards per year but is selling 80,000 skateboards per year. Annual costs for 80,000 skateboards follow.
I need need help with this one thank you!
hh.2
Please help with question marks and show work Cookie Business Productions Costs: Direct material $ 0.60 Direct labor $ 1.00 Variable manufacturing overhead $ 0.40 Total variable manufacturing costs per unit $ 2.00 Fixed manufacturing overhead per year $ 139,000.00 In addition, the company has fixed selling and administrative costs: Fixed selling costs per year $ 50,000.00 Fixed administrative costs per year $ 65,000.00 Selling price per cookie $ 3.75 Number of cookies produced 2,780,000 Number of cookies sold 2,600,000 Full (absorption) costing : Full cost per unit $ ??? Ending Inventory Full (absorption) costing $ ??? Variable costing : Variable cost per unit $ ??? Ending Inventory Variable costing $ ???
Summer Enterprises produces "Breeze" and "Storm" cooling fans. Selected data related to each product is as follows: Breeze Storm Sales price per unit $200 $300 Direct materials per unit $60 $70 Direct labour per unit $30 $35 Variable overhead per unit $10 $15 Direct labour hours per unit 2 There is a maximum of 24,000 direct labour hours available each year.
.