Q8 What factors should stembiso consider before making a decision?
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Q8
What factors should stembiso consider before making a decision?
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- As an accountant doing an accounting evaluation for the case study, give a brief introduction.In accounting and business terms, why would zama want stembiso to keep profitability and productivity in mind?"MacGyver Corporation manufactures a product called Miracle Goo, which comes in handy for just about anything. The thick tarry substance is sold in six-gallon drums. Two raw materials are used; these are referred to by people in the business as A and B. Two types of labor are required also. These are mixers (labor class I) and packers (labor class II). You were recently hired by the company president, Pete Thorn, to be the controller. You soon learned that MacGyver uses a standard-costing system. Vari-ances are computed and closed into Cost of Goods Sold monthly. After your first month on the job, you gathered the necessary data to compute the month’s variances for direct material and direct labor. You finished everything up by 5:00 p.m. on the 31st, including the credit to Cost of Goods Sold for the sum of the variances. You decided to take all your notes home to review them prior to your formal presenta-tion to Thorn first thing in the morning. As an afterthought, you…
- Our examples in the chapter have focused on manufacturing, where the output is units of product and the inputs are manufacturing activities or costs. The concept of productivity can be applied in a variety of settings, wherever there are inputs and outputs. For example, consider LandscapeCity, a landscape design company that specializes in small landscape projects for people living in cities. Amanda Caldwell, the assistant manager, is in the process of trying to determine if productivity has been improving since she was hired 6 months ago. Because it is a design firm, labor is the only significant expense, but Amanda is unsure if the number of projects or the dollar of sales volume should be used when computing productivity. She has collected these data for sales and labor expenses for the past 6 months: Month Labor Expense Number of Projects Sales Dollars 1 $ 20,830 43 $ 20,990 2 27,840 58 22,800 3 20,292 50 29,680 4 14,094 14 19,460 5 14,826 19 22,580 6 21,492 50…Goulburn, Incorporated produces parts for heavy equipment used in mining and construction. The plant that produces one part common to many vehicles is highly automated, so all labor is considered part of factory overhead. The plant manager, who has just been promoted, would like to understand how overhead costs fluctuate in order to improve planning and budgets. After discussions with both financial and operations members of the plant staff, there is general agreement that the best cost driver for overhead is machine-hours. Monthly data were collected from the most recent two years on machine-hours and overhead. More months of data were available, but a process change had taken place about 30 months earlier, so the staff believed any data from before that time would be misleading. The data are shown in the following table: Month 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Machine-Hours 40,300 38,300 31,100 43,400 51,600 46,500 43,400 63,100 37,300 54,700 53,700 37,300 60,900 59,900…Goulburn, Incorporated produces parts for heavy equipment used in mining and construction. The plant that produces one part common to many vehicles is highly automated, so all labor is considered part of factory overhead. The plant manager, who has just been promoted, would like to understand how overhead costs fluctuate in order to improve planning and budgets. After discussions with both financial and operations members of the plant staff, there is general agreement that the best cost driver for overhead is machine-hours. Monthly data were collected from the most recent two years on machine-hours and overhead. More months of data were available, but a process change had taken place about 30 months earlier, so the staff believed any data from before that time would be misleading. The data are shown in the following table: Month Machine-Hours Factory Overhead 1 39,300 $ 527,100 2 37,300 416,500 3 30,100 365,800 4 42,400 498,200 5 50,600 590,700 6 45,500 503,400 7…
- Big Boomers makes custom clubs for golfers. Most of the work is done by hand and with small tools used by craftsmen. Customers are quoted a price in advance of their clubs being manufactured. To produce clubs at a profit, management must have a thorough understanding of product costs. Jeff Ranck, manager of the business, is using direct labor hours as the activity base for allocating overhead costs. He estimated the following amounts at the beginning of 2022: Estimated total overhead. .$190,000Estimated direct labor hou .16,000 hours The following information is available for job number 17, which was started and completed in February 2022: - Direct materials used$1200- Direct labor used$600(corresponding to 50 direct labor hours) Prepare journal entries to: a. Record all the manufacturing costs charged to job 17 . b. Record the completion of job 17. c. Record the cash sale of job 17 in its entirety at a selling price of13%of its manufacturing cost. Record in a separate entry the…Cassidy Manning is the assistant controller at LeMar Packaging, Inc., a manufacturer of cardboard boxes and other packaging materials. Manning has just returned from a packaging industry conference on activity-based costing. She realizes that ABC may help LeMar meet its goal of reducing costs by 5% over each of the next three years. LeMar Packaging’s Order Department is a likely candidate for ABC. While orders are entered into a computer that updates the accounting records, clerks manually check customers’ credit history and hand-deliver orders to shipping. This process occurs whether the sales order is for a dozen specialty boxes worth $80 or 10,000 basic boxes worth $8,000. Manning believes that identifying the cost of processing a sales order would justify (1) further computerization of the order process and (2) changing the way the company processes small orders. However, the significant cost savings would arise from the elimination of two positions in the Order Department. The…Rick Pines and Joe Lopez are the plant managers for High Mountain Lumber’s particleboard division. High Mountain Lumber has adopted a just-in-time management philosophy. Each plant combines wood chips with chemical adhesives to produce particle board to order, and all product is sold as soon as it is completed. Laura Green is High Mountain Lumber’s regional controller. All of High Mountain Lumber’s plants and divisions send Green their production and cost information. While reviewing the numbers of the two particleboard plants, she is surprised to find that both plants estimate their ending Work-in-Process Inventories at 75% complete, which is higher than usual. Green calls Lopez, whom she has known for some time. He admits that to ensure their division would meet its profit goal and that both he and Pines would make their bonus (which is based on division profit), they agreed to inflate the percentage completion. Lopez explains, “Determining the percent complete always requires…