PE 21-8A Using process costs for decision making obj. 4 EE 21-8 P. 997 The costs of materials consumed in producing good units in the Forming Department were $94,000 and $82,800 for May and June, respectively. The number of equivalent units produced in May and June was 500 tons and 450 tons, respectively. Evaluate the cost of materials between the two months.

PE 21-8A Using process costs for decision making obj. 4 EE 21-8 P. 997 The costs of materials consumed in producing good units in the Forming Department were $94,000 and $82,800 for May and June, respectively. The number of equivalent units produced in May and June was 500 tons and 450 tons, respectively. Evaluate the cost of materials between the two months.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter26: Lean Manufacturing And Activity Analysis

Section: Chapter Questions

Problem 26.7EX: Calculate lead time Williams Optical Inc. is considering a new lean product cell. The present...

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QUESTION 17 ACCOUNT Work in Process-Forging Department Date Item Nov. 1 Bal., 1,200 units, 60% completed 30 Direct materials, 8,300 units 30 Direct labor 30 Factory overhead 30 Goods transferred, 2 units 30 Bal., 900 units, 70% completed Debit 124,500 18,950 20,196 Credit ? ACCOUNT NO. What is the Direct Materials Cost Per Equvalent Unit? What is the Conversion cost per equivalent unit? What is the cost of the beginning work in process completed during May? What is the cost of the ending work in process? What is the amount of the costs transfered to Finished Goods (or the next department)? Balance Debit 20,856 145,356 164,306 184,502 ? ? Credit The above information concerns production in the Forging Department for November. All direct materials are placed in process at the beginning of production. Do not use $ or commas in your answers.
Problem 20-5AA FIFO: Process cost summary; equivalent units; cost estimates LO C3, C4, P4 Skip to question [The following information applies to the questions displayed below.] Tamar Co. manufactures a single product in two departments. All direct materials are added at the beginning of the Forming process. Conversion costs are added evenly throughout the process. During May, the Forming department started 32,400 units, and transferred 34,200 units of product to the Assembly department. Its 5,400 units of beginning work in process consisted of $92,880 of direct materials and $768,708 of conversion costs. It has 3,600 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $784,080 of direct materials costs and $3,495,492 of conversion costs were charged to the Forming department. The following additional information is available for the Forming department. Beginning work in process consisted of…
Problem 20-5AA FIFO: Process cost summary; equivalent units; cost estimates LO C3, C4, P4 Skip to question [The following information applies to the questions displayed below.] Tamar Co. manufactures a single product in two departments. All direct materials are added at the beginning of the Forming process. Conversion costs are added evenly throughout the process. During May, the Forming department started 32,400 units, and transferred 34,200 units of product to the Assembly department. Its 5,400 units of beginning work in process consisted of $92,880 of direct materials and $768,708 of conversion costs. It has 3,600 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $784,080 of direct materials costs and $3,495,492 of conversion costs were charged to the Forming department. The following additional information is available for the Forming department. Beginning work in process consisted of…
Problem 20-5AA FIFO: Process cost summary; equivalent units; cost estimates LO C3, C4, P4 Skip to question [The following information applies to the questions displayed below.] Tamar Co. manufactures a single product in two departments. All direct materials are added at the beginning of the Forming process. Conversion costs are added evenly throughout the process. During May, the Forming department started 32,400 units, and transferred 34,200 units of product to the Assembly department. Its 5,400 units of beginning work in process consisted of $92,880 of direct materials and $768,708 of conversion costs. It has 3,600 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $784,080 of direct materials costs and $3,495,492 of conversion costs were charged to the Forming department. The following additional information is available for the Forming department. Beginning work in process consisted of…
Multiple Choice $2,371 U $7,700 U $10,800 U $16,320 U
Calculate lead time Williams Optical Inc. is considering a new lean product cell. The present manufacturing approach produces a product in four separate steps. The production batch sizes are 45 units. The process time for each step is as follows: Process Step 1 5 minutes Process Step 2 8 minutes Process Step 3 4 minutes Process Step 4 3 minutes The time required to move each batch between steps is 5 minutes. In addition, the time to move raw materials to Process Step 1 is also 5 minutes, and the lime to move completed units from Process Step 4 to finished goods inventory is 5 minutes. The new lean layout will allow the company to reduce the batch sizes from 45 units to 3 units. The time required to move each batch between steps and the inventory locations will be reduced to 2 minutes. The processing time in each step will stay the same. Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the (A) present and (B) proposed production approaches. (Round percentages to one decimal place.)
(Appendix 3A) Separating Fixed and Variable Costs, Service Setting Louise McDermott, controller for the Galvin plant of Veromar Inc., wanted to determine the cost behavior of moving materials throughout the plant. She accumulated the following data on the number of moves (from 100 to 800 in increments of 100) and the total cost of moving materials at those levels of moves: Required: 1. Prepare a scattergraph based on these data. Use cost for the vertical axis and number of moves for the horizontal axis. Based on an examination of the scattergraph, does there appear to be a linear relationship between the total cost of moving materials and the number of moves? 2. Compute the cost formula for moving materials by using the high-low method. Calculate the predicted cost for a month with 550 moves by using the high-low formula. (Note: Round the answer for the variable rate to three decimal places and the answer for total fixed cost and total cost to the nearest dollar.) 3. CONCEPTUAL CONNECTION Compute the cost formula for moving materials using the method of least squares. (Note: For the method of least squares, round the variable rate to two decimal places and total fixed cost and total cost to the nearest dollar.) Using the regression cost formula, what is the predicted cost for a month with 550 moves? What does the coefficient of determination tell you about the cost formula computed by regression? 4. CONCEPTUAL CONNECTION Evaluate the cost formula using the least squares coefficients. Could it be improved? Try dropping the third data point (300, 3,400), and rerun the regression.
Variable costs and activity bases in decision making The owner of Dawg Prints, a printing company, is planning direct labor needs for the upcoming year. The owner has provided you with the following information for next year's plans: Each color on the banner must be printed one at a time. Thus, for example, a four-color banner will need to be run through the printing operation four separate times. The total production volume last year was 600 banners, as shown below. The four-color banner is a new product offering for the upcoming year. The owner believes that the expected 600-unit increase in volume from last year means that direct labor expenses should increase by 100% (600 + 600). What do you think?
(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.
Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loud-speakers. The factory overhead incurred is as follows: Indirect labor 400,400 Cutting Department 198,800 Finishing Department 114,800 Total 714,000 The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Setup 138,600 Number of setup Quality Control 261,800 Number of inspections Total 400,400 The activity-base usage quantities and units produced for the two products follow: Number o Setup Number of Inspections Direct Labor HoursSubassembly Direct Labor HoursFinal Assembly Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 5420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.